With an increasingly likely interest rate hike coming from the RBA in November, one retail body is concerned it would create an unnecessarily difficult Christmas environment for an already challenged industry.
According to a report on Bloomberg there is a rising chance that November 2 will see an interest rate of 4.75 per cent, up from a five-month steady 4.5 per cent.
United Retail Federation national president, Scott Driscoll, blasted the idea, labelling it ‘vandilisation’ to the critical Christmas retail period for Australia’s largest employer.
“The RBA has made this mistake before,” Driscoll said. “It drove up interest rates just before we entered the global financial crisis, which forced it to make some dramatic changes later, and it also hiked interest rates last year in December, which is terrorist timing for retail.
“The RBA shouldn’t meet in December. It doesn’t in January, and all it does is create a false sense of doom in consumer’s minds.”
He said retailers are already struggling in the environment and operating on very thin margins with little more to trim. Driscoll also claimed local industries face tough competition from overseas and online retailers as the strong dollar makes importing a more competitive option.
Driscoll said the value of the dollar isn’t sustainable, but indicators from the banks are that it will remain high in the short term.
He claimed the problem for the domestic economy is that there’s a disparate strength amongst the various verticals. “We’re essentially running a two speed economy.
“The mining and resources sector is going gangbusters, but we still have a very patchy retail sector.”