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Retailers see case for rate cut amid weak consumer confidence
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Peak industry body the Australian Retailers Association (ARA) today called on the RBA to reduce interest rates in February after the Consumer Price Index (CPI) dropped from 3.5 percent down to 3.1 percent.
ARA Executive Director Russell Zimmerman said given consumer sentiment is currently weak and retail trade figures have shown no growth, the lower annual CPI confirms the case for reducing interest rates.
"The RBA has to take into account CPI when making a decision to cut interest rates, however the low inflation rate means there's no reason for the RBA not to cut rates.
"The latest ABS figures released in early January showed no growth where retailers were expecting a boost due to an interest rate cut and early Christmas shoppers. However, retail has remained flat and that is an indication of weak consumer confidence and the need for relief.
"As consumers head into February they will be ensuring debts from Christmas are paid off and household spending is monitored.
"Unfortunately a lack of consumer confidence means retailers are not making the start to the year they hoped for and any predictions for growth will be put on hold.
"While a lowering of interest rates is the outcome retailers need to help rebuild consumer confidence, ARA warns the Government can't place any more burden on consumers or business through additional taxes or charges.
"It's clear retailers are bearing the burden of decreased spending in uncertain economic times. ARA is looking to governments not to increase the cost of living through additional taxes and charges as federal and state budget considerations commence in the New Year.
"With December trade figures to be released in February, retailers are hopeful of some Christmas spending cheer given most people leave their Christmas shopping to the last minute. But ARA expectations for growth over the holiday season are soft with only a 2.2 percent growth predicted compared to Christmas 2010," 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 policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.ara.org.au or call 1300 368 041.
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