Retailers have urged the Reserve Bank to pause further interest rate hikes to allow the full effects of July’s increase to impact economy, saying falling consumer and business confidence is further challenged by an uncertain economic outlook.
CommBank’s Household Spending Intentions Index released yesterday confirms the slump in confidence follows three consecutive interest rate rises, and with more on the cards as inflation is expected to reach 7 per cent later this year, struggling businesses are increasingly wary of the months ahead.
National Retail Association Chief Executive Dominique Lamb said despite considerably strong conditions at present, the effects of current rate rises need to settle before making more decisions that impact the viability of small businesses.
“We know that turnover in the sector is being driven by increasing consumer prices and not the volume of consumer spending.
“Business operators are still faced with escalating cost pressures in both the supply chain and labour market, which is being passed on to consumers to be able to make ends meet.”
Lamb said the RBA should wait at least a full month to judge the impact of the latest rate rise before moving again.
“We are seeing the effects of rate hikes and the cost of living taking hold on household budgets. Further rate hikes will continue to slow down consumer spending in the coming months, and the added increase to overhead costs will put many struggling businesses at risk of closure.”