Consumer demand remained solid in the September quarter, Statistics New Zealand figures out today show, underpinning the view that the Reserve Bank will hike interest rates again next month.
The value of seasonally-adjusted retail sales grew 2.4 per cent on the previous quarter, although that was inflated by higher petrol
prices.
Allowing for price movements, seasonally adjusted sales volumes rose 1.3 per cent, the government agency said.
Compared with the same quarter a year ago, third quarter sales rose 7.4 per cent, just above forecast.
The data adds to the view that Reserve Bank Governor Alan Bollard will follow up last month's rate hike with another 25 basis point rise to 7.25 per cent on December 8.
Dr Bollard last month cited the rampant housing sector, strong consumer demand and high oil prices as the reasons behind his decision to resume tightening rates after a six-month break.
The New Zealand dollar was buying US67.85c shortly after the release, from its US68.14c local open.
The more volatile monthly figures, also out today, show higher fuel prices may be beginning to take a toll. Seasonally-adjusted retail sales fell 0.8 per cent in the September month.
That was slightly worse than economists' expectations for a 0.5 per cent fall, and was due largely to the motor vehicle industry, where vehicle sales dropped 11.4 per cent in the month, following a 6.8 per cent increase in August.
Excluding motor vehicle-related industries, core sales increased 1.1 per cent.
ANZ National Bank's head of market economics, Cameron Bagrie, said the monthly data indicated higher petrol prices were going to have a material impact on demand in future.
That shouldn't deter Dr Bollard from hiking rates again, however.
"I think they are locked and loaded for a hike, irrespective of what happens over the next two weeks given the strong labour market data (last week)," he said.
"The door will remain firmly open towards a further hike in January."
Household labour force data out last week showed unemployment dropped to a 23-year low of 3.4 per cent in the September quarter.
- NZPA
