Sales figures show another rate cut is needed: retailers

Submitted 3/04/2009

AAP

A dramatic fall in retail sales shows another interest rate cut is needed to stimulate the economy, retailers says.

Retail sales fell for the first time in five months, down two per cent in February to a seasonally adjusted $18.87 billion.

The last time retail sales fell on a month-to-month basis was in September 2008.

Australian National Retailers Association (ANRA) chief executive Margy Osmond said the fall showed businesses were in for a "bumpy ride" in 2009.

Ms Osmond called on the Reserve Bank of Australia to cut interest rates by 0.5 percentage points at its meeting this month to stimulate consumer confidence.

"The spurt in consumer spending in December and January, fuelled by lower interest rates and government bonus payments, has slowed," she said.

"Australians are still not feeling confident about spending and another interest rate cut next week is clearly needed.

"We would urge the RBA to consider another 0.5 per cent cut to interest rates when it meets next week."

Ms Osmond backed the Rudd government's second stimulus package, a $42 billion spend including cash payments of up to $950.

The first $10.4 billion stimulus package, released just before Christmas, boosted retail sales by $1.3 billion in December and January, she said.

"Judging by the effects of the first stimulus package, we believe the second package may inject about $2.4 billion into the retail sector over the next four months," Ms Osmond said.