Australian retailers warn RBA’s rate hold a setback for sector recovery

RBA holds cash rate at 3.85% despite easing inflation.

Retail industry bodies have criticised the decision by the Reserve Bank of Australia (RBA) to hold the official cash rate at 3.85%, warning it could stall the sector’s fragile recovery and dent both consumer and business confidence.

The Australian Retailers Association (ARA) and National Retail Association (NRA) expressed disappointment, arguing that the RBA missed an opportunity to support struggling retailers amid weak consumer spending and mounting operational costs.

“Weak consumer spending and high business costs continue to put pressure on retailers,” said ARA CEO Chris Rodwell. “With inflation well within target range, today’s RBA decision is a missed opportunity to bolster the outlook of operators around the country.”

Rodwell described current trading conditions as “subdued by historical standards,” stressing that relief is “sorely needed” for an industry that employs one in ten Australians and contributes $430b to the national economy.

He outlined a litany of cost pressures facing retailers, including rising rents, increasing wages and superannuation contributions, surging energy and insurance premiums, and escalating supply chain costs. Additionally, Rodwell pointed to a “wave of retail crime” impacting businesses across the country.

Adding to the strain is the rise of ultra-low-cost international e-commerce platforms such as Temu and Shein, which are rapidly capturing market share without being subject to the same regulatory and employment standards as local retailers.

“Many small businesses simply don’t have the resources to cope,” Rodwell stressed.

He urged the government to focus on cutting regulation and lifting productivity and called on the RBA to stay open to future rate cuts.