On the back of the latest retail spending figures, Australian Retailers Association (ARA) CEO Paul Zahra says it’s time for the Reserve Bank of Australia to cut interest rates when it meets next Tuesday.
A total of $36.45 billion was spent at retail throughout the month of September 2024, according to Australian Bureau of Statistics (ABS) figures released today.
This was up 2.3 per cent on the same month last year, but represented growth of just 0.1 per cent compared to August 2024.
“We are calling on the Reserve Bank of Australia to provide a cash-rate cut when it meets next week,” Zahra said.
“This decision would give confidence to the retail sector in the lead-up to the all-important peak Christmas season, where many discretionary retailers make up to two-thirds of their profits.”
He said the cumulative impact of interest rates rises and inflationary pressures resulted “in slow consumer spending in most categories.”
The ABS category “Other Retailing” – which includes cosmetics, sports and recreational goods – saw the strongest growth in September (up 5.2 per cent year-on-year) along with the staple category of Food (up 3.1 per cent).
Cafes, restaurants and takeaway services were up by 1.4 per cent year-on-year. Clothing, footwear and accessories were up by 0.8 per cent.
Household Goods were up 0.03 per cent while Department Stores were down 0.2 per cent.
“There is some buoyancy in the cosmetics, sports and recreational goods category, which show us the ‘lipstick effect’ in action – with Australians continuing to spend on little personal luxuries versus larger purchases,” Zahra said.
Despite this, he said many retail businesses in that sector “are doing it tough, especially small businesses”.
Zahra said that retailers are now focused on Black Friday (November 29) and Cyber Monday (December 2) sales, and the Christmas and the holiday season: “Most consumers have already commenced Christmas shopping to spread out purchases. We know this year more people will be shopping even earlier.”
“This remains one of retail’s most challenging years – with a continued slowdown in discretionary spend, high business costs along with ongoing challenges such as retail crime, supply chain disruptions, and the most significant workplace relations reforms in decades.”
