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A RETAIL industry group warns the Reserve Bank of Australia (RBA) must lower the base interest rate to allow a speedy recovery for the sector.
The National Retail Association (NRA) questioned the RBA's latest decision to hold the cash rate at 3.5 per cent due to “firm” consumption growth in the first half of 2012.
Executive director Gary Black (pictured) says the latest Australian Bureau of Statistics data shows retail sales had dwindled by 0.2 per cent to a seasonally adjusted $21.4 billion in July. Forecasters had predicted a 0.2 per cent rise in retail spending.
“What these figures show is that the retail sector is far from being on the road to recovery,” says Black.
“Retailers continue to do it tough and there is a general feeling among store owners that perhaps politicians and regulators do not appreciate just how tough trading conditions are right now.”
However, RBA governor Glenn Stevens defends the Board’s decision to leave the rate unchanged for the third consecutive month. He cites moderate employment growth and increased capital expenditure in the resources sector as reason for not adjusting the rate.
“With inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate,” he says.
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