RBA Cash Rate Pause Not Enough to Combat Price Increases

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By Published On: March 20, 20240 Comments

Some retailers are relieved by the RBA’s decision to continue to keep rates paused this month, but increasing economic pressures are mounting.

The latest meeting of the RBA, one of just eight planned for 2024, has resulted in a further cash rate pause. Cash rates have been paused until its next meeting in May.

The Australian Retailers Association (ARA), has welcomed the RBA decision today to again hold cash rates at 4.35 percent.

ARA CEO Paul Zahra said March’s rate decision will give the retail industry and Australians much-needed relief as the cost-of-living crunch continues to bite. 

“This decision is no surprise given the downward inflationary trend however, it provides important stability for Australians and businesses. At a time of immense financial pressure and hardship for most, holding the cash rate remaining stable at 4.35 percent since November is an important confidence signal for our economy.

“Retail performance has been subdued in recent months, with discretionary spending taking a significant hit. Whilst interest rates have remained on hold for four months, most Australian household budgets remain under significant pressure. 

“With the rising cost of doing business and softening discretionary spending putting strong pressure on retailers, this is a much-needed break.”

Fellow retail body, the National Retail Association (NRA) is not satisfied with the decision, instead calling on the Reserve Bank to urgently cut interest rates as inflation slows and businesses struggle with high cost-of-trading.

“January sales outpaced the December Christmas trading period by 1.1 per cent, as revealed by the Australian Bureau of Statistics, indicating how poor retail’s peak sales season performed,” National Retail Association Director Rob Godwin said. 

“While demand is high, middle Australia, the target market for most retailers, is under immense economic pressure from the excessive 13 interest rates rises. 

“As consumers continue to tighten their purse strings retailers have had to slash orders for new stock to avoid losing money on excess inventory.

“If the Reserve Bank leaves cutting interest rates to 2025, we would risk losing current and potential investors into Australia, which means we will see a higher-than-usual number of retail businesses exit the market,” he said.

About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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