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Retail sales fall, but no implications for monetary policy

Fuseworks Media
Fuseworks Media

Wellington, June 14 NZPA - Retail sales fell by 0.3 percent in April as department store sales fell 3.3 percent, but economists see no need for the Reserve Bank of New Zealand (RBNZ) to adjust monetary policy.

The value of seasonally adjusted total retail sales fell by $18 million in April, following a similar sized rise, 0.5 percent, in March, Statistics New Zealand said.

"This winter is proving to be a difficult environment for the country's retailers. The economic recovery has been slow, and we're now seeing rising interest rates, inflation, an imminent emissions trading scheme and extra goods and services tax costs," said Cameron Brewer, chief executive of the Newmarket Business Association.

"Shoppers are keeping their hands in their pockets with their spending power eroding all over the place. Good news, however, will come in October with across-the-board tax cuts, but we've got to get through this winter first. It's a tough patch for retailers."

Core retail sales, which excluded the four vehicle-related industries, were close to flat, down just 0.2 percent, or $8 million. Twelve of the core retail industries recorded decreases.

When a 0.7 percent, or $10m decrease, in sales across the four vehicle-related industries was included, it resulted in a 0.3 decrease in total retail sales.

ANZ said the seasonally adjusted figure was in line with market expectations and the core figure was better than expected.

The data had no implications for monetary policy.

"With the RBNZ having embarked on policy stimulus removal, the hurdle to getting the RBNZ to pause in July is high. Ongoing consumer spending restraint will not stop the RBNZ from hiking further, but it will be influential in terms of where the official cash rate ultimately ends up," ANZ said.

Fifteen of the 24 retail industries had a sales decrease, led by department stores, down 3.3 percent or $11m.

Automotive fuel retailing fell 1.1 percent or $6m and chemist retailing was down 3.6 percent or $6m.

Statistics NZ said all other decreases were more modest.

The accommodation industry had the largest sales increase with 7.0 percent or $15m, the largest hike for the industry since September 2003.

It was followed by supermarket and grocery stores, up 0.5 percent or $6m.

The total retail sales trend had been going up since February 2009, but has flattened in recent months.

While the core retail sales trend had been falling slowly since October 2009, down a total of 0.9 percent since then -- the period of decline was the first since 1995.

By region, seasonally adjusted sales fell 0.8 percent in Auckland and 0.5 in Wellington. All other regions recorded flat or increasing sales.

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