Retailers encouraged by inflation figures
Inflation data for the year to September was released by the ABS today, with the 5% increase the greatest since 1995 (excluding the period when the GST was introduced). The inflation rate is now well above the 2-3% target range of the RBA but is not expected to stop the central bank cutting interest rates at their next meeting in November.
Food inflation for the September quarter was at 1.4%, bringing the yearly rate up to 3.4% – well below the figure seen earlier this year when commodity prices were skyrocketing.
The Australian National Retailers Association is encouraged by the CPI figures for the September quarter, but says it is no longer consumers’ primary concern.
“Inflation is yesterday’s news,” ANRA CEO Margy Osmond. “Consumers know the receding threat of inflation reflects a bigger problem – a general slow down of the economy with new risks for everyone. They’re worried about job security and servicing debt. Consumers’ confidence has been low throughout the year and they expect an anxious 2009.”
“We’ll find out just how cautious consumers have become this Christmas period.”
The Australian Retailers Association (ARA) said the ABS Consumer Price Index (CPI) figures released today indicated inflation over the past year had been driven by increases in supply-channel costs.
ARA Executive Director Richard Evans said the CPI annual rise of 5.0% through the year to September quarter 2008 must be looked at in the context of supply-channel driven inflation. “Inflation this year is not about consumer demand. Increases in the supply channel costs have been driving price increases. The past interest rate rises imposed by the RBA have wilted consumer sentiment to the lowest since 1992 and this has had a negative impact on retailers,” he said. “Prices are not the issue at the moment, it’s consumers not spending that is the problem. When the retail sector is suffering, business will dry up right through the supply channel and this means the entire economy will start to be affected.”
“What we need now is a boost to consumer confidence because if consumers stop spending jobs will be lost,” Mr Evans added.