Interest rate rise is worrying consumers, expert says

There are good reasons for consumers to start spending again later in the year, one industry expert has said.

Potential rises in the interest rate are worrying consumers, according to one industry expert.

Executive general manager of local business banking at the Commonwealth Bank Symon Brewis-Weston said people are not spending much Aussie credit, despite retailers' efforts to entice them, because they are worried about the global economy.

"Still, with the job market firm and wages edging higher, there are good reasons for consumers to start spending again later in the year," he added.

His comments come after the organisation's Business Sales Indicator (BSI) - which tracks the value of debit and credit card transactions processed through the firm's point-of-sale terminals - noted that Australian retail figures were flat over the month of May.

The institution - which offers a range of Commonwealth Bank credit cards - revealed that growth has slowed to 3.4 per cent, the most sluggish in 11 months.

And Craig James, chief economist of the bank's broking subsidiary CommSec and author of the BSI, declared that the steady retail figures experienced over May would mean that the Reserve Bank of Australia could leave the interest rates on hold for the "foreseeable future".

"And unless we see signs of improvement in consumer and business spending in the near term there are good reasons for the Reserve Bank to stay on the sidelines," he commented.

But there was good news for the repair services sector, which saw an increase in spending of 1.8 per cent, while there was a one per cent growth for service providers and a 0.7 per cent increase in the amusement and entertainment industry.

Last month, the BSI noted that dealings rose by 0.2 per cent, in trend terms, in April - a 4.6 per cent growth in the month - which was the slowest for eight months, with Mr Brewis-Weston calling the increases very modest.

By Emma North