Rosy retail sales figures show that we are buying more stuff while paying less for it

Retail sales rose a brisk 1.5 per cent in the September quarter in real or volume terms, making 4.7 per cent for the year and outstripping the rise in retailers' takings.

In dollar terms sales were up a seasonally adjusted 0.9 per cent, to $19 billion, making 4.1 per cent for the year.

The fact that sales volumes have risen more than values reflects falling prices over the past year in nine of the 15 retail industries the statisticians divide the sector into. Indeed prices are lower than they were four years ago in nine retail industries, led by a drop of a third in prices for electronic and electrical goods.

In the latest quarter, retail prices fell 0.6 per cent. Westpac economist Michael Gordon attributed that to seasonally weak food prices and the legacy of past strength in the New Zealand dollar.

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"Subdued inflation has helped to give consumers more bang for their buck in the last few years," he said. "That will change if the recent softening in the New Zealand dollar is sustained."

Core retail sales, which exclude car yards and petrol stations, rose 1.4 per cent in the quarter and 4.5 per cent over the year in volume terms, and by 0.8 per cent and 4.2 per cent respectively in dollar terms.

The quarter's largest increase was in supermarkets and grocery stores, which recorded a 1.9 per cent jump in sales volumes following four quarters of weak sales.

The past year has seen exceptional population growth including an increase of around 1 per cent from net migration.

In per capita terms nominal sales were up 1.1 per cent in the September quarter and 3.2 per cent for the year.

The largest increase in sales by value over the past year was recorded by the food and beverage services industry - largely cafes and restaurants - continuing a steadily rising trend that has seen sales climb 20 per cent over the past four years.

In the latest quarter spending in this category rose 3 per cent in real terms, making 7.5 per cent for the year.

"This is the third consecutive strong quarter for this category and indicates households are willing to spend on discretionary items like eating out," said ASB economist Nathan Penny.

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Deutsche Bank chief economist Darren Gibbs expects retail spending growth to remain reasonably solid in the near term with electronic card transaction numbers suggesting December-quarter spending had started strongly.

"As we move into 2015, lower incomes in the dairy sector will be a drag."

However, he said relatively restrained spending growth during the commodity price upswing meant less concern about the scope for spending to weaken substantially.

Spending up

• Retail sales rose 1.5% in the September quarter in volume terms, making 4.7% for the year.

• In dollar terms, sales were up a seasonally adjusted 0.9% to $19 billion.

• Volumes rising more than values reflects falling prices over the past year in nine of the 15 retail industries.