"The latest cards transactions data indicate that household spending has accelerated to start 2015. On-going employment growth and strong net migration inflows will continue to support spending growth this year," he said.
"Also lower fuel prices and interest rates will boost household disposable incomes as well as the housing market, further underpinning spending growth. The main exception to the rule is likely to come in rural areas where the low milk price will constrain incomes and spending.
Westpac Bank economist Felix Delbruck said the core retail measure - which excludes fuel, had now risen 2.7 per cent over the last three months, the fastest quarterly growth since late 2006.
"In the last six months consumers have come out of their shell after several years of fairly subdued growth," said Delbruck. "While it's a little surprising that this should have occurred so late in the piece, the stars are clearly currently aligned for stronger retail activity - petrol is cheap, mortgage rates are low, house prices are rising, and both migrants and tourists are arriving in high numbers. Along with booming construction activity, we expect strong growth in retail spending to continue supporting the domestic economy through this year."
