ARA hails rate hold

NATIONAL: Peak retail body the Australian Retailers Association (ARA) has welcomed the Reserve Bank of Australia (RBA)’s decision not to raise the official cash rate.

According to ARA executive director Richard Evans, the move, announced by RBA on May 6, followed a significant dive in discretionary consumer spending.

Although there had been an increase in some consumer spending categories - the weighted average of Australia's eight capital cities from March 2007 to March 2008 was up 4.2 per cent - the most significant contributors were automotive fuel (up 5.4 per cent), pharmaceuticals (up 13.1 per cent), electricity (up 6.0 per cent), rents (up 2.0 per cent) and other financial services (up 2.0).

All of these categories were essential services and consumers had been forced to rein in spending in other categories, Evans said.

The breakdown of spending categories from March 2007 to March 2008 showed clothing and footwear spending down 0.5 per cent.

The RBA's move acknowledged that interest rate rises in 2007 and early 2008 had bitten hard on Australian consumer discretionary spending, Evans concluded.

"Australian consumers are doing it tough – and so too are the retailers," he said.