KEY POINTS:
The dollar fell a third of cent against the United States dollar in quick time today, after Statistics New Zealand reported retail sales fell a seasonally adjusted 1.2 per cent in April.
The unexpected fall was a sign an economic slowdown, long hoped for by the Reserve Bank,
could be on its way.
A slump in vehicle sales accounted for nearly half the 1.2 per cent decrease.
The decline in overall sales is the largest since February 2004, when sales fell 1.8 per cent.
Today's figures were also a surprise to the markets, with the median forecast among economists in a Reuters poll having been for a flat result.
Publishing the data today, Statistics New Zealand (SNZ) said despite the April decrease, sales remained high following increases of 1 per cent in March and 2.3 per cent in February.
Motor vehicle retailing fell a seasonally adjusted 4.1 per cent in April from March, with the decrease coming after unusually high March sales.
Respondents in the vehicle sales industry had attributed the high March figures partly to sales of fleet cars, SNZ said.
Sales in the core retailing industry groups, which exclude the four vehicle-related industries, decreased a seasonally adjusted 0.9 per cent in April, compared again to predictions of a flat result.
After vehicle retailing, other major contributors to the fall in total retail sales were accommodation, down 6.3 per cent and appliance retailing, down 4.8 per cent.
Department stores were the only group to show a notable increase in sales for April, up 2.6 per cent, SNZ said.
The trend for appliance retailing had been increasing since April 2006, rising strongly at an average rate of 2.1 per cent a month between September and December, but had since eased.
In Wellington, retail sales fell a seasonally adjusted 2.6 per cent in April, compared to March, while in Waikato they were down 1.5 per cent, and in Auckland down 1.1 per cent.
For the remainder of the North Island sales rose 0.3 per cent.
Canterbury had a rise in sales of 0.8 per cent, while for the remainder of the South Island sales were down 1.3 per cent.
Actual sales this April were up 7.4 per cent from April 2006.
Today's figures could provide a moment of respite for Reserve Bank governor Alan Bollard in his battle with domestic inflation.
In a bid to ease demand in the economy he raised official interest rates by 0.25 of a percentage point in March -- which might have influenced the latest data -- then again in late April and then last week.
The kiwi dollar was trading at US75.05c before the announcement and dived to US74.80c.
The currency hit a post float high this week of US76.4c, which prompted the Reserve Bank to intervene in the currency market for the first time since the kiwi was floated in 1985.
The Reserve Bank has hiked interest rates three times this year and 12 times in the current tightening cycle to try and quell over-heated domestic demand and the inflation it generates.
Deutsche Bank economist Darren Gibbs said it was good news for the RB.
"We've seen sentiment soften up and now we have a piece of data that is softer."
"But you've got to see it in the context of what was a very, very strong first quarter, and one month does not make a trend.
'But the anecdotes for May are a little on the soft side as well, so we'll wait and see how the credit card numbers pan out at the end of next week."
- NZPA