The Rugby World Cup helped swell retail sales 2.2 per cent in real terms during the September quarter, the strongest quarterly increase for nearly five years.

World Cup-related visitors temporarily lifted the population by nearly 2 per cent. Supermarkets and accommodation providers both noted boosted sales, Statistics New Zealand said.

Accommodation sales were up 8.7 per cent in dollar terms and 6.5 per cent by volume.

"The biggest contribution to the strong result was in food and beverages," Westpac economist Michael Gordon said.


"Supermarkets and grocery stores were up 3.8 per cent [real], specialist food rose 5 per cent and liquor 3.5 per cent."

Food and beverage services, which include cafes and bars, also recorded a 1.7 per cent increase in the quarter.

The quarter's 2.2 per cent real increase, seasonally adjusted, was much stronger than economists had expected - the consensus was 0.7 per cent more - than electronic card transactions data had foreshadowed. It was also slightly larger than the 2.1 per cent nominal increase in retail sales.

That real sales rose slightly faster than nominal sales is largely explained by a drop in prices at the petrol pump, which benefited from a high dollar.

But even for the "core" retail spending, which excludes the automotive sector, the 2.7 per cent increase in sales was split between a 2.4 per cent increase in volumes and a 0.3 per cent rise in prices.

The 0.3 per cent rise in the retail price deflator is softer than the 0.4 per cent increase in the consumers price index over the same three months and suggests pricing power is still relatively weak among retailers, ASB economist Christina Leung said.

Nonetheless, the strong increase in retail volumes in the September quarter built on a 1.1 per cent increase in March and 1 per cent in June, suggesting that beyond the World Cup an underlying recovery in household demand was taking place, she said.

Sales volumes rose for 13 of the 15 sectors the statisticians divide retail activity into, with supermarkets and grocery stores and accommodation providers recording the largest increases.


The exceptions were department stores, down 0.1 per cent, and furniture and floor coverings, down 6 per cent.

But Infometrics economist Matt Nolan said it was encouraging that overall volumes of durable goods sold rose 0.7 per cent to the highest level since June 2008, on the back of higher sales of vehicles and electronic goods.

However he expects the recent uncertainty around global financial markets to lead households to pull back from spending on durables and other discretionary items.

Compared with the same period a year ago core retail sales were up 5.6 per cent in dollar terms (excluding the effect of the GST increase) and 4.5 per cent in real terms.

But in per capita terms real retail sales had recovered less than half the 10 per cent drop seen during the recessions, Gordon said.

"And they will continue to face headwinds from the overhang of household debt, a subdued housing market, slow jobs growth, the disappearance of dozens of non-bank lenders, and increased consumer caution."

Deutsche Bank chief economist Darren Gibbs said that insofar as the strong September outcome was boosted by the Rugby World Cup it could not be extrapolated forward.

He also pointed to yesterday's BNZ-Business NZ performance-of-services index which fell to its lowest reading since October 2009.

"Markets are also clearly focused on the broader risks to the domestic outlook stemming from events offshore," Gibbs said. "As far as the Reserve Bank is concerned, we still think that a mid-2012 start to a gradual tightening cycle makes sense."