Retailers are struggling to hold on as consumers hold back, according to peak retail industry body the Australian Retailers Association (ARA).

The ARA said last week's decision by the Reserve Bank of Australia (RBA) to hold interest rates despite calls by the industry to cut them has left retailers struggling to hold on as consumers face another month of household budgets stretched to the limit with no respite and no choice but to hold back on discretionary spend in the lead up to Christmas.

ARA executive director Russell Zimmerman said while the decision to leave the cash rate unchanged may have been a response to growth in parts of the economy and other factors such as inflation, the retail sector is left on dangerous territory as consumers retract their spending even further.

"Consumer confidence is at an all time low, which has left the retail sector in the negative as year on year trade figures show declines across categories which rely on discretionary spend," Mr Zimmerman said.

"Key events such as spring racing and the lead up to Christmas would usually see retailers employ more staff, bring in more stock and generally seize opportunities to post some healthy growth as consumers restock their wardrobes and start shopping for presents.

"However, with more pressure than ever on household budgets as a result of taxes, mortgage stress and the soaring cost of living, retailers will be reigning in on stock availability and staffing levels.

"In light of a struggling sector, retailers can only live in the hope that the strain of interest rates will be eased for consumers in time for the festive season by way of a rate cut in October," Mr Zimmerman said.

For over 100 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $240 billion retail sector which employs over 1.2 million people. As an incorporated employer body under the Fair Work (Registered Organisations) Act 2009 and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia.

Visit www.retail.org.auor call 1300 368 041.

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