With inflationary pressures hitting small retail businesses the hardest, according to MYOB’s latest SME Performance Indicator, many are asking for a rate cut for Christmas.
Retail gross value added (GVA) has been declining at a steady pace since 2021, and this season’s lacklustre holiday-period spending is expected to continue the trajectory. According to MYOB’s Consumer Spending Snapshot, a quarter of Australians are planning to spend less at Christmas this year.
But it’s not just retailers who should be worried; SMEs in all sectors are worse off this quarter. August’s SME Performance Score is -2.3, down 0.3 from May 2024.
“It has been a challenging winter for small businesses,” said MYOB CEO Paul Robson. “While inflation is moderating, persistent cost-of-living pressures coupled with still high interest rates have caused many households to continue to hold back spending on non-essential goods and services. This is particularly affecting the retail and hospitality sectors.”
Dr Angela Jackson, Lead Economist at Impact Economics and Policy and Women in Economics National Chair said, “Small businesses are a bellwether for the broader economy, and we have seen extended weakness in the retail sector.
“Next quarter we expect to start to see a recovery in the retail sector as tax cuts flow through to consumers, and inflation moderates further, however an interest rate cut before Christmas would certainly help with that recovery.”
If an interest rate cut were to arrive before Christmas, 22 per cent of customers surveyed by MYOB say they would spend more than planned.
