October’s rate hike could be the last straw for lower-income spending

“The results suggest that pressures on the cost of living could force some consumers to limit their spending on more socially responsible goods,” said analyst Camille Wynter.

Australian Retailers Association chief Paul Zahra said the willingness of shoppers to open their wallets so far this year has been “really remarkable”, but he acknowledged the sector is not fully transmitting the impact of rate hikes to the economy have.

“There will likely be a lag effect from the current inflationary conditions,” he said. “We could see a slowdown in sales early in 2023.”

However, other major retailers are unfazed by holiday spending and are optimistic their offerings match consumer readiness to buy.

“We are very happy with how we are going to implement our plans for Christmas. We’re just going to focus on what we can control and deliver,” Peter Alexander’s chief executive and Smiggle owner Premier Investments, Richard Murray, said last week when discussing the company’s financial results.

“We can manage the risks of a slowdown if there is one in the second half… [and] we have to handle it better than our competitors.”

Myer, David Jones and Dan Murphy’s operator Endeavor Group also expressed similar optimism, as August retail spending results released last week showed that total nationwide sales for the month rose 19.2 percent compared to this time last year .

The Market Recap Newsletter is a summary of the trading day. Get it every afternoon on weekdays.

https://www.smh.com.au/business/companies/october-rate-raise-could-be-final-straw-for-lower-income-spenders-20221003-p5bmsc.html?ref=rss&utm_medium=rss&utm_source=rss_business October’s rate hike could be the last straw for lower-income spending

Brian Lowry

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