"There were surprising declines in spending on food, accommodation and non-store retailing - the latter two possibly indicating that a strong NZ dollar has been making the going tougher for domestic operators in those categories"
- Felix Delbruck, senior economist at Westpac Bank
The NZD/USD currency pair is still trading in boundaries of a triangle pattern that was formed in the middle of April. Moreover, the pair bounced back from the upper boundary, as fundamental data from New Zealand disappointed markets, raising concerns the RBNZ will not be the first country to start raising interest rates and will delay this decision until the economy strengthen further.
The official report from the Statistics New Zealand unveiled that the nation's retail sector saw more mild sales growth than it was projected last quarter, with weak sales growth in food, accommodation and non-store sales, that partially offset strong growth recorded in fuel and vehicle sales. On a seasonally adjusted basis, sales rose 1.2% in the November-December period, accelerating from a downwardly revised 0.2% in the prior quarter, and falling short of analysts' expectations for a 1.7% pickup. In general, only nine of the 15 retail industries logged higher sales volumes over the corresponding period.
Before the report, analysts were making bets the reduction of the RBNZ's stimulus programme will be done in March. Moreover, these projections echo with the central bank's comments that pointed out the interest rate will be increased soon in order to control growing inflationary pressure in the country, as demand outpaces supply.
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