Retail sales figures for October provide little clear evidence of the slowdown in household spending the Reserve Bank is looking for before it will take its finger off the interest rate trigger.
Statistics New Zealand said overall sales were down 0.2 per cent on September, seasonally adjusted, but when thevolatile automotive sector is removed "core" retail sales were up 1.1 per cent.
Governor Alan Bollard, when raising the official cash rate to 7.25 per cent last Thursday, warned that whether further tightening would be required depended on evidence that demand pressure - in effect consumer spending and the housing market - showed signs of moderating over the months ahead.
Core sales, at $3.54 billion, were up 7.1 per cent on October last year, the strongest annual increase since April.
Appliance stores recorded a 4.2 per cent gain on September on the coat-tails of continuing strength in the housing market. Furniture and floor coverings sales were up 1.4 per cent.
Cafes and restaurants were 3.8 per cent ahead of September.
But the overall 0.2 per cent decline in retail sales reflected a 7 per cent drop in car sales after a 10.9 per cent fall in September.
Bank of New Zealand economist Craig Ebert said those falls in car sales followed strong rises in July and August, suggesting discounting to clear a spike in car inventories which had built up in the June quarter.
He said another factor was that petrol prices had ramped up most steeply in August and peaked in September. But vehicle registrations for November had bounced back 4.1 per cent, seasonally adjusted.
If consumer sentiment is weakening, a drop-off in sales of big-ticket items like cars would be an early sign of more widespread weakness to come.
"We are starting to hear reports of spending going soft in some areas, like department and general merchandise stores, and some regions," Ebert said.
Retailers Association chief executive John Albertson said the festive season had got off to a slow start.
"Consumer goods retailers are reporting that it has been a bit sluggish in December to date, but with the traditional Kiwi last-minute Christmas shopping rush and the fact Christmas Eve falls on a Saturday this year we are hopeful that things will pick up."
