Retailers interest rate dismiss rise

THE latest rate rise is not expected to affect shoppers' behaviour this holiday season.

BIG and small retailers have shrugged off the third interest rate rise in three months, saying the 25 basis-point increase would not deter shoppers in the lead-up to Christmas.

"I don't think the extra quarter of a percentage point rise in interest rates would make much difference to consumers," JB Hi-Fi managing director Richard Uechtritz said yesterday.

"All the indices are heading in the right direction. Consumer confidence has certainly returned and the economy is bubbling along.

"Our stores have been trading well. The latest rise may affect some shoppers a little, but we have seen a gradual return of consumer confidence over the past few months.

"Even sales of big-ticket items such as flatscreen television sets have skyrocketed over the past few months.

"What's nice is that when I read the wish list for Christmas shoppers, JB Hi-Fi items rank among seven of the top 10."

Alister Haigh, chief executive of Adelaide-based Haigh's Chocolates, said he was more concerned about the weather than interest rate rises.

"Chocolates are an inexpensive gift and when people run out of ideas, they often turn to chocolates as Christmas gifts," Mr Haigh said.

"However, if temperatures soar, sales of chocolate tend to fall -- as it is too hot to eat chocolates, and I don't blame them."

He said the three rate rises in the past three months have amounted to an increase of 0.75 percentage points, compared with a fall of 4.25 percentage points since the financial downturn hit global economies 12 months ago.

Haigh's Chocolates, which turns over $20 million in annual sales, has 12 stores in Adelaide, Melbourne and Sydney.

Morris Symonds, chairman of upmarket jewellery store Fairfax & Roberts in Sydney, said his customers were usually unaffected by interest rate rises.

"Shoppers who buy luxury items such as diamonds and expensive watches are not heavily influenced by interest rate rises," Mr Symonds said.

"However, with the global downturn, customers are becoming more discerning in what they buy and often return to brands they trust. The downturn has also seen a significant fall in diamond prices because of the strength of the Australian dollar. Coupled with reduced demand from the US, there has rarely been a better time to buy diamonds.

"But we have noticed the flamboyant buyer of luxury jewels has vanished in the downturn."

David Harris, chief executive of fruit and vegetable chain Harris Farm, said interest rate rises would not deter shoppers from buying their Christmas turkey, ham, prawns and oysters over the festive season.

"Despite three rises in three months, interest rates are still low," Mr Harris said.