Retail sales drop as shoppers watch their dollars

Supermarket sales fell 0.7 per cent in February, though lower food prices could be part of the reason. Photo / Greg Bowker

Retail sales sagged in February, their second substantial fall in three months.

Total retail sales fell 0.6 per cent from January on a seasonally adjusted basis, Statistics New Zealand said.

Core sales, which excluded the volatile automotive sector, fell 0.9 per cent, after a rise of 0.3 per cent in January and a fall of 2 per cent in December.

Core sales in the three months ended January were down 1.5 per cent from the preceding three months.

Compared with February last year, total sales were up 2.3 per cent and core sales were just 0.7 per cent higher.

Part of the weak result could be attributed to lower prices, with the food price index having fallen 1.3 per cent in February, ASB economist Christina Leung said. Supermarket sales were 0.7 per cent lower.

Lower tourist numbers appeared to be reflected in weaker spending in the hospitality industry, she said. Visitor arrivals were down a seasonally adjusted 1.9 per cent from January.

Demand for big-ticket items fell, with sales in caryards down 1 per cent, appliance retail sales down 4.2 per cent and furniture and floor coverings down 2.6 per cent.

"However, there is always the possibility that the March month could reveal a decent rebound," UBS economist Robin Clements said.

"Such a possibility was flagged by the electronic card transactions data for March, which showed transactions in the retail industries up 2.1 per cent on February and for core retail industries up 2.2 per cent."

Goldman Sachs JBWere economist Philip Borkin expects the recovery, albeit sluggish, in consumer spending to continue. But he suggested people were becoming more discerning in their spending.