According to retail trade figures issued by the Australian Bureau of Statistics, the Australian retail sector declined by 2 per cent in February, demonstrating the biggest decline since the introduction of the GST in July 2000.
The 2 per cent fall is a direct contrast to December and January, which recorded healthy increases of 3.8 per cent and 0.5 per cent, an indication that the effects of interest rate cuts and stimulus packages have worn off.
The sector that was hit the hardest in the retail industry was definitely department stores which plummeted nearly 10 per cent in February, an indication that consumers are cutting back on discretionary items.
“The spurt in consumer spending in December and January, fuelled by lower interest rates and government bonus payments, has slowed,” commented Margy Osmond, CEO of the Australian national Retailers Association.
Osmond said that approximately $1.55 billion of the Government’s first economic stimulus package was spent in retail; she expects the second instalment to have an even better effect and help improve overall market figures.
“A second and larger round of cash bonuses is now underway. Judging by the effects of the first stimulus package, we believe the second package may inject about $2.4 billion into the retail sector over the next four months,” Osmond said.
Osmond also emphasised that another interest rate cut will definitely help to regain consumer confidence.
“Australians are still not feeling that confident about spending and another interest rate cut next week is clearly needed,” she said.
“Monetary policy must continue to make its contribution. We would urge the RBA to consider another 0.5 per cent cut to interest rates when it meets next week.”