National Retailers Association (NRA) CEO Dominique Lamb has weighed in on the rate rise, warning retailers to prepare for a change in conditions.
The Reserve Bank of Australia (RBA) has increased the nation's official cash rate for the first time in more than 11 years.
The RBA has increased the cash rate by 25 basis points from 0.10 per cent to 0.35 per cent, marking the first rate rise since November 2010.
Lamb said the move could be a tipping point for business owners.
“The interest rates hike, coupled with the looming increases in superannuation and award wages, represent a very unwelcome triple whammy for business owners," she told Ragtrader.
“This interest rates increase is designed to reduce discretionary spending, and therefore it’s bound to cause pain for many retailers.
“Sadly, monetary policy is a relatively inaccurate tool for fighting inflation. Normally high inflation equates to levels of high activity in the economy, which would signal good times for retailers."
On this occasion however, Lamb said inflation is being driven by factors such as global fuel prices, fresh food shortages caused by floods, and rising construction costs.
“These factors have already hurt retailers, especially those in areas such as hospitality which will be further impacted by the rates hike.
“We understand why the RBA has acted in this way, but we urge the Board to look closely at the impact of its decision on business owners before moving again.”