The Australian Retailers Association (ARA) said the ABS Retail Trade figures released July 1 showing a dismal 0.6 percent growth in April sales showed consumers were starting to cocoon in their homes and was a direct indication the RBA needs to take a steady hand to interest rates.
ARA Deputy Executive Director Russell Zimmerman said April sales have seen consumers pull back again in areas of retail where they were slowly starting to relax. This is a clear sign that the bombardment of interest rate rises since October are taking their toll on homeowners' discretionary spend.
"April 2010 retail sales are only up 1.8 percent compared to the same time last year. This is appalling growth and well below the current rate of inflation," Zimmerman said.
"One of the first areas of retail to be hit with a decline in sales when consumers tighten their belts is cafes, restaurants and takeaways but it's also one of the first areas people will start to spend in when they are loosening their purse strings.
"Consumers were slowly beginning to treat themselves to small luxuries including a night out for dinner or a weekday lunch but April's sales fell for Cafes, Restaurants & Takeaway Food Services (-0.7%) showing consumers are cocooning again.
"While consumers adjust to significant increases in their mortgage repayments by spending more time at home sales in Food Retailing (groceries) have increased (1.3%). Household Goods Retailers who have been suffering all year have also had significant growth (2.6%) as consumers spend more time ‘nesting'. The start of the sporting season also means consumers are investing in TVs for major televised events including the World Cup.
"Sales also rose in Clothing, Footwear & Other Personal Accessory Retailing (0.3%) but fell in Department Stores (-2.4%), Other Retailing (-0.7%) and Cafes, Restaurants & Takeaway Food Services (-0.7%).
"South Australia (2.9%) recorded the largest rise in sales in April (seasonally adjusted), followed by Victoria (1.5%), Queensland (1.2%), the Northern Territory (1.2%), Tasmania (0.5%). Sales fell in New South Wales
(-0.8%), the Australian Capital Territory (-0.3%) and Western Australia (-0.1%).
"The RBA has moved too far, too fast with successive interest rate rises and it's time they cut retailers and consumers some slack," Zimmerman said.
For over 105 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.5 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.au or call 1300 368 041.
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