The National Retail Association (NRA) is urging the Reserve Bank of Australia to ease up on interest rates following “disappointing” November trade in 2023.
Figures released by the Australian Bureau of Statistics (ABS) revealed spending in November, which has traditionally been the strongest month for retail, grew by just 2.2% compared with last year.
NRA director Rob Godwin said when inflation and population growth were taken into account, the figure represented a reduction in real terms.
“These are disappointing figures given the growth of Black Friday and Cyber Monday sales events in recent years,” Godwin said.
“The Reserve Bank said they wanted to squeeze spending. Well, spending has been well and truly squeezed.
“We predict the first quarter of 2024 is going to be the most challenging quarter for businesses in many years.
“For the sake of business owners and their employees, we are urging the Reserve Bank to start cutting interest rates again.”
Speaking after last month’s monthly meeting, where interest rates were paused, RBA governor Michele Bullock said further tightening of monetary policy is still on the table.
“There are still significant uncertainties around the outlook,” Bullock said. “While there have been encouraging signs on goods inflation abroad, services price inflation has remained persistent and the same could occur in Australia.
“There also remains a high level of uncertainty around the outlook for the Chinese economy and the implications of the conflicts abroad.
“Domestically, there are uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time when the labour market remains tight.”
Bullock said the outlook for household consumption also remains uncertain.
“Many households [are] experiencing a painful squeeze on their finances, while some are benefiting from rising housing prices, substantial savings buffers and higher interest income,” she said.
“Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks.
“In making its decisions, the board will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market.
“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.”