Wellington, Sept 14 NZPA - Retail sales figures slipped back in July, following strong results in June, sending the New Zealand dollar plummeting nearly half a cent against the greenback.

Seasonally adjusted core retail sales -- which exclude the four vehicle-related industries -- edged down 0.1 percent in July, Statistics New Zealand (SNZ) said today.

While supermarket and grocery store sales gained 1.9 percent and sales in cafes and restaurants lifted 4.3 percent, recreational goods retailing fell 7 percent and liquor sales fell 9.3 percent.

Total retail sales fell a seasonally adjusted 0.4 percent in July from June, following a 1 percent rise in June.

Vehicle sales fell 2.3 percent -- having fallen 0.8 percent in June but gaining 7.6 percent in May -- and automotive fuel sales fell 1.3 percent.

In actual terms, total retail sales were up 2.2 percent or $116 million in July from a year earlier. Core retail sales rose 1.7 percent or $67m over the same period.

The NZ dollar, which had been climbing since last Wednesday, dropped from around US73.35c to around US72.90c on the retail figures.

ASB said the July data pointed to a slowing in the recovery in retail spending, following the strong result in June.

Many of the categories that showed strong growth in June reversed out some of the gains in July, including spending on recreational goods, department stores and liquor.

Spending falls of 2.4 percent in accommodation and 6.1 percent in accommodation and bars was surprising given an increase in visitor arrivals in July, ASB said.

The recovery in vehicle sales looked to be slowing, following strong results in previous months.

"There has been some slowing in vehicle registrations in recent months, which brings into question the sustainability of the recovery in vehicle sales following the sharp declines seen over the recession," ASB said.

Despite that, there was potential for vehicle sales to improve as households brought forward purchases of major items ahead of the GST rise at the start of October.

Even with the small decline in retail spending in July, which had followed a substantial rise in June, given the volatility of the data the result pointed to a recovery taking place in retail spending.

Deutsche Bank chief economist Darren Gibbs said the rise in spending recorded in July at groceries and supermarkets was likely to have been influenced by a surge in food prices, with the spending rise at cafes and restaurants and fresh produce stores also likely to be price driven.

The retail sales report continued to highlight significant differences in performance across the country, with nominal spending in Auckland and Waikato regions up 4 percent from a year earlier, while Wellington was up just 1.8 percent and Christchurch up 0.9 percent, Mr Gibbs said.

ANZ said that smoothing through the monthly volatility, it was apparent that durable retailing was firming, with efforts to beat the upcoming GST rise likely to be a major motivation.

But consumers remained concerned about the state of their finances and were cutting back on discretionary spending.