KEY POINTS:
Retail sales rose a seasonally and inflation-adjusted 1.8 per cent in the December quarter, above economists' predictions, figures published today by Statistics New Zealand (SNZ) show.
The high figure comes amid falls in the price of fuel and strengthens what many economists consider to be an already strong case for the Reserve Bank's Alan Bollard to lift interest rates in his Monetary Policy Statement on March 8.
The median prediction of economists in a Reuters poll had been for a rise of 1.4 per cent.
Seasonally adjusted retail sales for the quarter were up 1.1 per cent, with automotive fuel retailing down 4.9 per cent ($73 million) while motor vehicle retailing was up 4.2 per cent ($81 million).
Sales for the core retailing group, which excludes those two categories, rose 1.5 per cent, with supermarkets and grocery stores up 1.4 per cent ($46m) and appliance retailing up 4.9 per cent ($29m). Cafe and restaurant sales fell 3.5 per cent ($32m).
The trend in total retail sales had lifted after a slight easing at the beginning of 2006, SNZ said. The trend in total retail sales volumes had also lifted after easing between the September 2005 and June 2006 quarters.
The December quarter was the second in succession to see a fall in automotive fuel retailing sales, but sales volumes had increased as prices had fallen.
Sales volumes in automotive fuel retailing increased 3 per cent in the December quarter and 1.4 per cent in the September quarter, after having fallen in the previous five quarters, SNZ said.
Retail Trade Survey deflators showed that in the December 2006 quarter automotive fuel retailing prices fell 12.4 per cent and were the lowest since the December 2005 quarter, with the most recent prices being 2.5 per cent higher than in December 2005.
For the December month, seasonally adjusted retail sales were up 0.7 per cent, slightly below median expectations of 0.8 per cent.
"It looks pretty strong. The nominal sales are pretty much in line, the surprise is the extent of the price fall which was petrol-driven, which gave us a higher volume effect," Robin Clements, senior economist at UBS said in a Reuters report.
Stephen Toplis, head of market economics at BNZ, said that all in all it was a fairly robust report that suggested the economy was still ticking along at a relatively rapid pace.
"Given the Reserve Bank said it wants to see a slowdown in domestic demand, and this is not a slowdown -- quite the opposite -- it's entirely consistent with them moving to at least one rate hike, if not a series."
- NZPA
