Today’s decision by the Reserve Bank of Australia (RBA) to keep the cash rate on hold at 3.85% has drawn strong criticism from retail industry bodies, with leaders warning the move could stall the sector’s fragile recovery amid persistent economic headwinds.

The Australian Retailers Association (ARA) and National Retail Association (NRA) said the RBA’s decision delivers a major setback for confidence across the country’s $430 billion retail industry, as weak consumer spending and surging business costs continue to take a toll.

“This is a missed opportunity,” said ARA CEO Chris Rodwell. “With inflation well within the RBA’s target range, a rate cut could have bolstered confidence and provided much-needed breathing room for thousands of retail operators nationwide.”

Rodwell said retailers are grappling with a perfect storm of challenges – from rising rents and soaring energy bills to increasing labour costs and mounting regulatory pressure.

Compounding matters is the sharp rise in retail theft and the growing dominance of ultra-low-cost overseas platforms such as Shein and Temu, which continue to disrupt the market without playing by the same rules as local operators.

“Retailers have proven incredibly resilient, but they’ve also worn more than their fair share of pain over the past few years,” Rodwell said. “We can’t expect a strong national economic recovery without a thriving retail sector.”

Industry leaders are also calling for urgent action on productivity reform and red-tape reduction, arguing that many small businesses lack the capacity to adapt to sweeping workplace changes currently underway.

With more than one in ten Australians employed in retail, the ARA has urged both the Federal Government and the RBA to prioritise policies that drive business investment and restore momentum to the sector.

“We stand ready to support the Federal Government in delivering meaningful economic reform,” Rodwell said. “And we strongly encourage the RBA to remain alert to opportunities to ease pressure in the coming months.”