New Zealand Retail Sales Rise After Interest-Rate Cut

By Tracy Withers
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Oct. 13 (Bloomberg) -- New Zealand's retail sales rose in August after the central bank cut interest rates for the first time in five years, buoying consumer confidence.

Retail sales gained 0.4 percent from July when they fell a revised 0.7 percent, seasonally adjusted, Statistics New Zealand said in Wellington today. Core retail sales, which exclude cars, fuel and workshops, increased 0.8 percent.

Reserve Bank Governor Alan Bollard unexpectedly cut interest rates in late July to kick-start the economy after it slumped into a recession in the first half of the year. The central bank may cut rates to a four-year low this month to maintain confidence in the economy amid a global credit crisis.


``This is stronger than expected and follows the cut in interest rates,'' said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. ``The Reserve Bank will cut the cash rate 100 basis points next week and that should provide support for consumers.''

New Zealand's dollar bought 61.13 U.S. cents at 12:15 p.m. in Wellington from 60.61 cents immediately before the report.

Fifty five percent of 1,034 people surveyed in the two weeks ended Aug. 10 expect the economy will worsen over the next year, down from 60 percent in a survey completed two weeks earlier, according to a poll conducted by Roy Morgan. Fifty percent said they will be better off financially in a year, the highest measure since early March.

Food Prices

Retail sales rose in 15 of the 24 store categories measured in the report, the statistics agency said.

The monthly sales series isn't adjusted to exclude price movements, so is volatile. Food prices rose 2.7 percent in August, the most in more than 19 years, which may have boosted sales, the agency said.

Supermarket and grocery sales, which make up one-fifth of all retailing, gained 1.2 percent. Spending at department stores, bars and clubs also increased. Car sales rose 1.1 percent.

Spending at fuel outlets dropped 3.3 percent, the first decline in four months, as prices fell. Appliance store sales dipped 1.1 percent.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.