Whyalla Chamber of Commerce and Industry President Mr Ron Hay said 2015 will be a period where confidence will need to be restored, so that consumers feel they have some certainty around their day to day lives, particularly in the area of their disposable income.
Mr Hay said, if we look at the last 12 months, we have witnessed at both state and federal levels, budget announcements that have fuelled uncertainty and unrest amongst consumers and hence a contraction of spending in some instances.
Consumers are no different to business, in that they have to deal with the rising cost of living and when you add budget cutbacks, a lack of job security and other factors, people become less inclined to shop, as they take stock of their financial position and what disposable income they will have.
Mr Hay said, an input to having a good economy is where individuals and families have disposable income, for recreational purposes, home items, leisure and pleasure. I think this is going to be one of the major challenges going into 2015.
Improvements in the employment market would help to shift consumer focus on spending rather than saving for constant catch up.
It is my view that there are a number of ‘economies’ within a country, such as national, state and local, with each possibly being different. Whyalla has a base economy and my feeling is that it is relatively stable, based on our industry and activities within the region, said Mr Hay.
(Reporter) Nationally, consumer confidence remains low with the weekly ANZ-Roy Morgan Consumer Confidence Rating rising by less than one per cent to 112 last week and from families polled results indicated that there was a slip in confidence about whether Australia would have continuous good times during the next five years or so.
(Reporter) It had been anticipated that the holiday period, as well as a fall in petrol prices, would encourage spending amongst consumers however the recent numbers indicate that people are still anxious to spend.
Mr Hay said many businesses would be looking to the Reserve Bank (RBA) to set the tone for the year ahead, through possible interest rate reductions, which can stimulate spending.
However on the other side of the coin, if we see further reductions in the value of our dollar, it may help certain sectors within our economy, but overall our imports will cost more and hence the cost of these goods will go up to the consumer.
Consumers then potentially make conscious decisions to not purchase electronic goods, vehicles and those items that they may get another year or two out of, to save some money, thus weakening the retail market, said Mr Hay.
This week the Australian Bureau of Statistics released the current national unemployment rate, which surprisingly dropped in December. However said Mr Hay, you need to look carefully at what drives these numbers and in most cases it is likely to be an increase in casual positions, not full time jobs.
Consumers spend money because they have a disposable income and a need to purchase a product or service, so hopefully the unexpected drop should allow some breathing space for the RBA to cut interest rates this year.