Retail sales fall, hit by vehicle sales plunge

Retail sales fell in January as vehicle sales fell sharply and fuel sales also dropped.

Total retail sales were down by a seasonally adjusted 1.1 per cent from December, with vehicle sales down 11 per cent and fuel sales down 2.6 per cent, Statistics New Zealand (SNZ) said today.

The fall in total sales was a surprise with the median forecast of economists in a Reuters poll having been for a flat outcome.

Core retail sales, which exclude the vehicle-related industries, rose a seasonally adjusted 0.3 per cent in January.

UBS senior economist Robin Clements said the silver lining to the retail figures was that because much of the decline was in the automotive area, and so were imports, the net impact on the economy was not so large.

ASB economist Jane Turner said that while the rise in the core retail component may look reassuring at first, much of the strength seemed to have come from supermarkets while many other components looked to have declined.

"We're interpreting this as consumers are remaining shy of the shops."

The rise in core retail sales followed a fall of 0.7 per cent in December.

The January lift was led by a 1.7 per cent increase in supermarket and grocery stores, and a 5.2 per cent rise in recreational goods sales. The biggest fall was in appliances, down 6.6 per cent, SNZ said.

The fall in total retail sales followed a decline of 0.7 per cent in December, with the fall in vehicle sales following rises of 6.8 per cent in November and 4.8 per cent in December.

The fall in fuel prices followed drops of 6.1 per cent and 6.7 per cent in November and December, respectively, the two biggest monthly falls since the series started in 1995, SNZ said.

The November and December falls reflected lower pump prices for petrol and diesel, but in January, while diesel prices fell again, prices for petrol were generally higher than in December.

SNZ said that as more data had become available, revisions showed the trend for total sales had been declining since January 2008, falling 2.9 per cent since then.

Overall that was a monthly average decline of 0.2 per cent, but in the past five months the rate of decline had increased to a monthly average of 0.4 per cent, SNZ said.

The core retail sales trend had been rising since 1995, at an average of 0.4 per cent a month. Since April 2007 the rate of increase had flattened to a monthly average of 0.1 per cent, the longest period of slow increase since 1995.

- NZPA