On April Fool’s Day, the Reserve Bank board decided not to cut interest rates, citing uncertainty about the economy.

At the time we criticised the decision arguing that not only were there enough signs that the economy was faltering and households were hurting, but that given the announcement of Donald Trump’s tariffs two days after the April RBA meeting, the board should have met again, rather than wait till the 20th of this month to make another decision.

Today’s retail trade figures highlight just how badly the RBA has misread the economy.

In the board’s statement in April, they noted:

“Household consumption growth had started to recover in the December quarter, underpinned by the ongoing pick-up in real household incomes. While some of this recovery in consumption appeared to reflect price-sensitive consumers concentrating spending in promotional periods during the December quarter, the pick-up in spending growth among components not affected by sales events suggested there had been a genuine improvement in underlying momentum. More recent indicators signalled that some of this pick-up had been sustained.” [our emphasis]

Well, today’s retail trade figures show the complete opposite. There was no genuine improvement, nor any sense of sustained pick-up in retail turnover.

The March quarter volume figures show that there was no growth of retail spending in January, February and March compared to the last three months of 2024.

If we exclude the essential spending on food, the picture is even worse. Australians bought 0.2% less non-food retail in the first three months of 2025 than they did in the last three months of 2024.

This signals very clearly that the pickup in sales in the last part of 2024 was due to consumers seeking out sales and bargains and not from any sense of improved conditions. The December 2024 quarter growth looks more like a blip than anything sustained.

The RBA correctly increased interest rates in 2022 as the spending picked up strongly after the end of the pandemic lockdowns. But they mistakenly kept hitting households even as the level of retail trade fell below the pre-pandemic trend level.

They then compounded this error by waiting too long to cut rates, and then by pausing in April rather than realising households were struggling and more relief was urgently needed.

The Reserve Bank should cut rates at least by 25 basis points when it meets later this month, and the Governor should admit that the data shows they were wrong not to cut rates in April.