The downturn in the retail sector has been due not only to higher official interest rates, says a key central bank official.
The downturn in the retail sector has been due not only to higher official interest rates, says a key central bank official.
Reserve Bank of Australia assistant governor (economic) Philip Lowe said the November rate rise was one of many factors responsible for poor retail sales.
Other factors included the higher rate rises by the major banks on top of the official rate rise and consumer uncertainty due to the poor world outlook.
"I think the November rate rise did have a big effect (on spending) because it was the 25 basis point rate rise from the Reserve Bank.
"On top that came an additional 20 basis points from private mortgage lenders," he said after delivering a speech in Adelaide on Friday.
"For many borrowers there was a rate rise of 45 basis points and that had a very significant effect on people."
Mr Lowe said the rates rise combined with global factors and rising utility prices had reined in spending.
"It's clear at the moment there is quite a deal of cautiousness out there, the interest rate increase ... is one factor," he said.
"The Greek situation is probably another, high utility prices, inflation... is another."
"These things collectively are working together to keep household spending quite subdued."
Mr Lowe said household sectors had become more conservative with their spending and saving habits from the middle of the past decade.
"This has been a trend building since the mid 2000s, with households trying to get their balance sheets into a less risk averse position."
"We had for the better part of more than a decade, up to the mid 2000s, households spending every dollar that they got in extra income," he said.
