Retailers call on Reserve Bank to cut interest rates

Australian retailers are calling on the Reserve Bank to urgently cut interest rates as inflation slows and businesses struggle with high costs of trading.

Interest rates were held at 4.35 per cent this month, with Governor Michele Bullock citing slowed economic growth and inflation holding steady at 3.4 per cent over the year to January.

The Reserve Bank also did not rule out future increases to interest rates, citing elevated services inflation and its determination to return overall inflation to its target range of 2-3 per cent.

Rob Godwin, Director at the National Retail Association (NRA), said weakening household consumption and high labour costs spell uncertainty for retailers who have had to keep up with business expenses by spending out-of-pocket.

“January sales outpaced the December Christmas trading period by 1.1 per cent, as revealed by the Australian Bureau of Statistics, indicating how poor retail’s peak sales season performed.

“While demand is high, middle Australia, the target market for most retailers, is under immense economic pressure from the excessive 13 interest rates rises.”

Godwin explained that as consumers continue to tighten their purse strings, retailers have had to slash orders for new stock to avoid losing money on excess inventory.

“If the Reserve Bank leaves cutting interest rates to 2025, we would risk losing current and potential investors into Australia, which means we will see a higher-than-usual number of retail businesses exit the market.

“We need more than a hold on current rates, we need the Reserve Bank to consider the high cost-of-trading business owners have to face every day as a consequence of costly policy decisions.”

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