Inflation - sorry the RBA still has the wrong retail mandate!

RBA Inflation / Interest Rate Mandate again……phoney war?

No movement from the Rudd Government, what is happening….?

We raised this matter in November 2008 and have regularly flagged this as a matter of concern for the Australian retail sector - the phoney interest rate war however is still going on.

Now that there are indications that interest rates might rise in 2010 this is a concerning issue for the Australian retail sector – Australian banks already moving to higher interest rates?

·         Retailers’ suppliers and importers are demanding clarity; the interest rate vs. CPI game being played between the RBA and the Rudd government is somewhat amateurish; not what is needed in these times.

·         Since November 2008 we have been asking for a review on the RBA Inflation / Interest Rate Mandate on behalf of the Australian retail sector.

·         Although complimenting the Rudd government on some great initiatives, we are over interest rate vs. CPI phoney war.

It is ridiculous for the RBA to be left dangling without clear government direction; the Australian retail sector needs a clear understanding on how interest rates can or might vary based on ‘assumed or actual inflation’.

A$ movements are gyrating based on Australian interest rate; it is the duty of the Rudd government to provide the RBA with clear, unambiguous guidelines for the Australian retail sector.

Our view, as expressed repeatedly in our bulletins is that the RBA needs to have inflation guidance on not only a basket of goods and services but a factor which allows interest rate cuts and rises when the cost of goods have risen or fallen with no benefit or some benefit moving from or to the retail sector.

·         Oil price spikes rises and falls being a good example – major Au$ rises and falls and the affect on imports another.

·         These factors are completely outside those which the Australian retail sector has control - when the CPI is adversely affected massive numbers of Australian retailers’ are affected by a lift in annual rents pegged to the CPI.

·         Surely commonsense says that cost inputs and cost benefits such as these should be taken into account in ‘an open rules’ environment to allow the retail sector to plan their businesses.

If the RBA had been given a new mandate then the RBA would not have ratcheted up interest rates based on crude inflation figures; we are all suffering as a result; the Howard government as well as the Rudd government culpable.

The RETAiL Alert Group will continue to push this argument to government until something gives.

We would welcome reader feed back on this issue; please respond by email RBA Mandate again….?

To comment on inflation and the RBA’s mandate email RBA’s Inflation Mandate

Tony Standley

Principal
The RETAiL Alert Group (Australia)
Mobile +61 (0)41 924 0497
e-mail info@adsass.com.au
Fax +61 (0)2 9987 0633
Website http://www.retailalert.com.au
 
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