- Nathan Penny, economist at ASB
Retail sales in New Zealand rose at a faster pace than expected, driven by supermarkets and grocery stores. Retail sales volume grew the most in more than two years, surging a seasonally adjusted 1.5% in the third quarter, up from a revised 1.1% in the preceding three month period. Analysts, however, expected a 0.8% increase in the reported period. Sales volumes for supermarket and grocery stores increased 1.9% over the quarter, while food and beverage services sales surged 3.0%, contributing the most to the jump in retail sales. Core retail sales, which strip out auto industry and fuel sales, climbed 1.4% from the previous quarter, up from a revised 1.2% in the second quarter, Statistics New Zealand said. The strong growth in retail spending indicates that consumers are still confident about their personal financial situations, despite higher interest rates undermining spending power.
When including the effect of price changes, retail sales inched higher just 0.9% over the quarter and 0.8% for core retail industries, signalling weak consumer-price inflation. Soft inflationary pressures are providing the RBNZ with ample room to keep interest rates at their current level, following a one percentage point increase in the Official Cash Rate since March. Most analysts project the RBNZ to delay hiking interest rates again until at least September 2015, while some expect the next move to come in 2016.
© Dukascopy Bank SA