Higher for longer rates point to gloomy future for retail
For those wanting rate cuts sooner rather than later, retail data this week is a glimmer of hope. But if rates are kept high for too long, economists think more businesses will go bust.
The retail sector is doing it tough. That much is evident from the latest official data, which found sales were down in March by 0.4%. It surprised analysts who expected a 0.2% lift on the back of strong population growth.
Adding to the pain was a revision to February, which was revised down to a 0.2% rise in sales.
As CommSec economists said in an analysis, it’s the weakest pace on record — when you exclude the unusual Covid lockdown period and the introduction of the GST. And it’s in line with poor consumer sentiment data, so it's unlikely to be a blip.
“Worries about higher-for-longer borrowing costs combined with persistent price pressures saw consumers rein-in their spending in March,” they said.
