According to two of Australia’s leading retail bodies, the Reserve Bank of Australia’s decision to rise the official interest rate for a third consecutive month will dramatically effect Christmas sales figures for retailers.
Margy Osmond, CEO of the Australian National Retailers Association, was disappointed with the decision.
“This is the first itme in six years the Reserve bank has lifted rates just before Christmas. This is the first time the RBA has lifted rates three months in a row, and it risks choking off higher retail spending during the most important trading period of the year,” she said.
“It’s disappointing the Reserve Bank didn’t wait until after the crucial Christmas period before deciding to raise rates again. The retail sector is still on unsteady ground and we would have preferred if the RBA left rates on hold until the New Year.”
Russel Zimmerman, executive director of the Australian retailers Association, echoed Osmond’s message and forecasts the rise will have a noticeable effect on sales.
“The 2009 ARA Christmas Retail Expectations Survey revealed 56 percent of retailers believed the past two interest rate rises would decrease sales over the festive season. With the extra rise today – these statistics may now rise and cause even greater impact to sales,” he said.
“In fact, around $140 will be added to monthly repayments on an average $300,000 mortgage as a result of the last three rate rises, affecting Christmas spending for those working within budget constraints.”
Zimmerman said that the decision was not what retailers needed after a year of inconsistent sales and lower consumer sentiment.
“Retailers are one of Australia’s largest employers and for further economic recovery they must have incentive to hold onto staff. Not only do retailers have increased wage bills as a result of the modern retail award to cope with in 2010, but now the RBA is hitting them from the other side by taking cash away from consumers who are still worried about their jobs,” he said.
“Instead of letting retail recovery gain some much needed momentum over the Christmas and post-Christmas trading period, the RBA is taking cash away from consumers at the worst possible time.”