Rates rise a concern for retail health this Christmas

The 25 basis point interest rate rise, announced by the Reserve Bank on December 1, may or may not have a major direct impact on the retail industry depending on who you listen to, but potential kick-on effects could be significant, according to industry observers.

The Australian Retailers Association claims the impact will be significant. Executive director, Russell Zimmerman, said a survey conducted by the association found 56 per cent of retailers saw a detrimental impact on their business from the past two interest rate hikes. The Christmas season was a "terrible" time for a third.

“If there is a downturn in business there will be a downturn in employment, such as the casuals that retailers often bring on around this time,” Zimmerman said.

“In turn, this will mean less money filtered back into retail. This interest rate hike could significantly knock the industry around.”

Zimmerman said people were still expected to spend this Christmas, but indications were that, with the interest rate hike being partially responsible, spending would be less.

“If somebody was preparing to spend $150 on Christmas, now they might just spend $100,” he said.

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