New Zealand retail sales rose more than expected in the June quarter as people spent a record amount on cars and auto-parts since the series began in 1995.

The total volume of spending rose a seasonally adjusted 1.3 per cent to $17.25 billion in the three months ended June 30, according to Statistics New Zealand, led by a 7.3 per cent boost in expenditure on motor vehicles and parts. That outpaced the 0.7 per cent growth forecast in a Reuters survey of economists. The volume of spending on fuel fell 2.6 per cent to $1.57 billion in the period, its second quarterly decline.

Stripping out motor vehicle related spending, core retail sales climbed 0.9 per cent to $13.4 billion.

In value terms, which accounts for both volume and price movements, spending rose 1.1 per cent to $17.62 billion, with core retailing up 0.7 per cent to $13.41 billion.


The kiwi dollar rose to 81.06 US cents after the report was released, from 80.92 cents immediately before. The figures come after an ANZ Roy Morgan survey showed consumers grew more optimistic this month, with the number of people willing to buy big ticket items outnumbering those who aren't.

Retailers have had to contend with tepid consumer demand over the past couple of years as households put more of their discretionary spending into repaying debt rather than hitting the stores. That's seen an increase in discounting as stores compete for market share.

The value of actual sales rose 4.8 per cent to $17.01 billion in the June quarter from the same period a year earlier, with a 13 per cent lift in spending on motor vehicles and parts, and a 12 per cent rise in non-store and commission-based retailing. Unadjusted retail sale volumes were also up 4.8 per cent to $16.67 billion from the June quarter last year.

The seasonally adjusted volume of spending at supermarkets and grocery stores, which accounts for 23 per cent of retail sales, rose 0.3 per cent to $4.06 billion in the June quarter, with values up 0.7 per cent to $4.21 billion.

Retailers built up their stocks 7.4 per cent to $6.33 billion from a year earlier, with a 65 per cent jump in non-store and commission-based retailing, an 18 per cent lift in specialty food, and a 14 per cent boost in cars and parts.

Consumer electronic goods retailers wound down their inventories by 3.3 per cent to $505 million from June 2011. The volume of annual sales of electronic and electrical goods climbed 13 per cent to $784 million, though the value fell 0.5 per cent to $642 million in the same period.

Falling prices for telecommunication equipment and audio-visual and computing gear have helped keep a lid on inflation over the past year, which eased to its slowest pace of 1 per cent in 13 years during the June quarter.

Westpac senior economist Anne Boniface said today's data pointed to solid underlying momentum in domestic spending.

It also supported the bank's view of robust growth in the New Zealand economy over the first half of 2012.

"With no Rugby World Cup effects to muddy the waters, it is clear domestic spending has gained momentum over the past year; supported by further improvements in the housing market and steady, albeit unspectacular, wage growth," Boniface said.

The data suggested there would be no "big letdown" in the June quarter, she said.

"For now we're comfortable with our pick of 0.6 per cent GDP growth in the 3 months to June."

The strength of retail spending in the June quarter took Westpac by surprise, but the fall in retail prices did not, she said.

"While the strength of the New Zealand dollar has been challenging for New Zealand exporters, it is a boon for New Zealand consumers who are able to take advantage of lower import prices."