RBA keeps interest rates on hold

Retail groups have welcomed the Reserve Bank’s decision this afternoon to hold off on another rise in interest rates.

The RBA’s decision to keep its key cash rate at 4.5% was widely expected and marks the second consecutive month of unchanged rates.

The RBA has lifted the official interest rate six times since October.  “Appalling yearly retail trade figures are a clear sign that the retailers can’t afford for consumers to cop another interest rate rise”  Australian Retailers Association deputy director Richard Zimmerman said on Friday.

Retail figures “pathetic” says ARA

The Australian Retailers Association (ARA) said the ABS Retail Trade figures released last week showing a “pathetic” 0.2% growth was “more bad news for retailers who have been slashing prices to get consumers through the door all year.”

ARA’s Russell Zimmerman said year-on-year growth from May 2009 to May 2010 painted an even bleaker picture than the monthly sales growth released in the latest report.

“May 2010 retail sales are only up 1.2% compared to the same time last year. This is not real growth – it is well below the current rate of inflation,” Zimmerman said. 

“Fashion retailers as well as department stores posted the strongest monthly sales growth from April to May 2010. However, over a 12 month period sales have actually declined for these same retail categories at -3.6% and - 5.8% respectively, explaining the constant discount war between clothing retailers and department stores,” Zimmerman said.

“It’s a pretty depressing outlook for retailers when their income from sales is decreasing while their expenses from wage bills are increasing due to the first phase of the modern award transitions and new minimum wage starting from July 1.  

Retailers are spending every waking hour trying to get customers in the door and hold onto staff.According to ABS, household goods retailing was down 0.2% in May compared to May 2009 (and down 1.4% compared to April 2010).

Fashion retailing was down 3.6%, departments stores down 5.8% while cafes and food services were up 8%.

C