Healthy rise in cash card use

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Electronic card transactions last month suggest a decent pick-up in retail spending.

Retail sector transactions charged to debt, credit and charge cards, which represent about 60 per cent of retail spending, rose 1.2 per cent from May levels when adjusted for seasonal effects.

It was well above economists' expectations of just a 0.1 per cent increase.

The "core" retail sector, which excludes transport fuels and vehicle sales, rose 2.1 per cent from May levels.

Compared with June last year core sales were 8.2 per cent higher, of which 2 percentage points was the increase in the GST rate in the interim.

Reflecting lower prices at the pump, spending on fuel fell 3.6 per cent to its lowest level since November last year.

Apparel sales were up 4.9 per cent on May, durables up 2.4 per cent and hospitality up 2.9 per cent, while the largest sector, consumables, rose 1.4 per cent.

Goldman Sachs economist Philip Borkin said that while much of the growth in spending had been coming from necessities - up 9.9 per cent on a year ago even before GST - spending on other things had picked up to an annual rate of 3.3 per cent, from just 1 per cent in January.

Deutsche Bank chief economist Darren Gibbs said that for the June quarter as a whole core retail spending rose 2.9 per cent from the March quarter.

ASB economist Christina Leung expects a continued recovery in consumer confidence to underpin further recovery in consumer spending over the coming year.