Wellington, Aug 13 NZPA - Retail sales rose a seasonally and inflation adjusted 1.3 percent in the June quarter, better than expected by economists, with the largest increase recorded in vehicle sales.

Statistics New Zealand (SNZ) said the quarterly rise in sales volumes was the fifth in a row, and the largest since the March 2007 quarter.

All four vehicle-related industry categories had higher sales volumes, with the largest increase the 4 percent lift in vehicle volumes.

The 20 core retail industry groups, which exclude the vehicle industries, accounted for just over half the rise in sales volumes with an increase of 0.9 percent.

The median prediction in a Reuters poll of economists was for a rise of 0.2 percent in the seasonally adjusted retail volumes.

Seasonally adjusted retail sales in the month of June rose 0.9 percent from May, with the biggest increase in recreational goods, which rose 9.5 percent or $18m.

SNZ said vehicle sales had been the largest contributor to the rise in sales volumes in the December and March quarters, as well as the latest quarter.

Among the core retail groups, the largest volume increases were a 3.4 percent rise in appliance retailing, 5.4 percent in accommodation, 3.4 percent in clothing and softgoods, and 0.8 percent in supermarkets and grocery stores.

Cafes and restaurants recorded the largest fall in seasonally adjusted sales volumes, down 2.6 percent, while recreational goods sales volumes fell 2 percent.

The value of actual retail sales in the June quarter was $16.1 billion, up 2.7 percent from a year earlier.

Total retail sales for the June quarter were up a seasonally adjusted 0.5 percent from the March quarter, and have risen every quarter since the March 2009 quarter.

Core retail sales were up a seasonally adjusted 0.4 percent in the latest quarter, following a 0.6 percent fall in the March quarter.

Vehicle sales were up 3.6 percent, while supermarket and grocery store sales lifted 0.9 percent, accommodation was up 4.8 percent and clothing and softgoods sales lifted 3.2 percent, SNZ said.

The largest fall in seasonally adjusted sales for the quarter was a 2.4 percent decline in fuel sales, while cafes and restaurants dropped 2.1 percent and recreational goods fell 2.3 percent.

For the month of June, fuel sales were down a seasonally adjusted 2.8 percent and appliance sales were down 3.7 percent.

ASB economist Jane Turner said the figures showed a gradual recovery in consumer demand, and the rise was relatively broad-based.

"Overall, it shows a modest recovery in the household sector."

UBS senior economist Robin Clements said the rise in volumes was surprisingly large, as retail prices fell as a result of heavy discounting.

The retail figures boosted the New Zealand dollar, which rose from around US70.85c to US71.35c by 11am, 15 minutes after the data was published.