RBA Rate Hike Deals Blow to Australian Retailers
The Reserve Bank of Australia (RBA) has increased the cash rate by 25 basis points to 4.60 per cent, its fourth increase this year and the highest level since late 2011.
This move comes as household spending shows early signs of weakening, with Australian Bureau of Statistics data showing that household spending was unchanged at $82.3 billion in August after rising 1.1 per cent in July.
Annual spending growth still remained 6.8 per cent, but the higher cost of borrowing is expected to further constrain discretionary spending, particularly on big-ticket categories such as furniture, household goods, appliances, and fashion.
Australian Retail Council Chief Economist Glenn Fahey stated that the latest increase could not come at a worse time for retailers and households, citing higher supply chain costs and elevated fuel prices as significant concerns.
Deloitte Access Economics had already forecast in September that real retail turnover growth would slow from 2.8 per cent in 2025-26 to 1.5 per cent in 2026-27 due to higher interest rates, softer employment, falling real wages, and weaker house prices.