KEY POINTS:
Shoppers may be starting to feel the pinch as latest figures released today showed they are spending less.
Retail sales fell 0.6 per cent in the June quarter, Statistics New Zealand said today.
Economists had forecast flat sales. Today's number, which is seasonally and inflation-adjusted, follows the largest
quarterly rise on record in the March quarter.
It's the first decline in 18 months, as appliance and vehicle sales in particular eased.
Along with recent suggestions the housing market may have started easing, today's retail figures could be early indications of the slowdown in the domestic economy that the Reserve Bank has been aiming for with its interest rate rises this year.
Today's figure is a surprise for many economists, with the median figure in a Reuters poll of forecasters having been for no change from the March quarter.
The New Zealand dollar, already down 9 per cent from a post-float peak a month ago, fell quickly on the news. It was down nearly half a US cent to US73.50c shortly after the announcement.
Today's data decreases the prospects of the Reserve Bank hiking interest rates again this year.
Appliance sales were down 5.5 per cent from the March quarter, while vehicle sales were down 1.3 per cent. Excluding vehicle-related sales, activity in the core retailing industries was down 0.8 per cent, seasonally and inflation adjusted.
Actual sales were up 6.3 per cent in the year to June.
When just seasonally adjusted, sales were up 0.4 per cent, or $72 million, in the June quarter from the three months to March. That followed a record increase of 3.3 per cent in the March quarter, and is the smallest increase since December 2005.
The largest increases were in supermarket and grocery stores (up 3 per cent or $97 million), and automotive fuel (up 3.7 per cent or $53 million).
The largest decreases were in appliances (down 7.4 per cent or $50 million) and accommodation (down 4.6 per cent or $30 million), SNZ said.
Excluding vehicle-related sales, activity in the core retailing industries rose 0.3 per cent in the quarter.
Seasonally adjusted retail sales fell in just the month of June, by 0.4 per cent, with some of the largest falls being in furniture and floor coverings, and motor vehicles, SNZ said.
The 3 per cent rise in supermarket and grocery store sales in the June quarter was due to a 1.7 per cent increase in sales volumes and a 0.5 per cent rise in prices, SNZ said.
For appliance retailing, the 5.5 per cent decrease in volumes was accompanied by a 1.3 per cent fall in prices.
Appliance prices had fallen every quarter since September 2002 and, in the June 2007 quarter, were 28 per cent lower than in the September 2002 quarter, SNZ said.
The 1.2 per cent seasonally adjusted fall in vehicle retailing, was made up of a 1.3 per cent fall in volumes and a 0.6 per cent rise in prices.
ANZ Bank chief economist Cameron Bagrie said the June quarter fall had to be put in perspective. "We had an upside surprise last month and now we've got a downside surprise.
You've got to iron out the volatility between the two.
"Reading between the lines of the housing data and the retail sales data, it does look like we're starting to see a bit of a softening from the exhorbitant rate of growth we saw in the first quarter."
UBS economist Robin Clements said all aspects of sales were weaker than expected.
"The temptation is to say after the astounding Q1 this is a bit of payback. Nonetheless, it is weak and it was weaker than expected and sets the countdown for Q2 GDP on a pretty weak note.
"It certainly reinforces the conclusion they (the Reserve Bank) might be done."
- NZPA
