New Zealand retail sales surge in Q2

Retailers in New Zealand saw a record rise in sales in the quarter to the end of June, but analysts still expect the central bank to cut interests in the near future as it grapples with stubbornly low inflation.

Robust spending in most of the retail trade industries has boosted total sales for the June quarter, following a more subdued rise in the March quarter, said the government's Statistics New Zealand agency on Friday.

The total volume of retail trade sales for the June quarter rose 2.3 percent the largest percentage increase since the December 2006 quarter following a 1-percent rise in the March quarter.

Industries with the largest sales volume increases were hardware, building and garden supplies, motor-vehicle and parts retailing, pharmaceutical and other store-based retailing, and food and beverage services.

The value of total retail sales rose by a record 2.2 percent to 19.9 billion NZ dollars (14.33 billion U.S. dollars) in the June quarter, following a subdued 0.8-percent rise in the March quarter.

On Thursday, the Reserve Bank of New Zealand (RBNZ) cut the official cash rate by 25 basis points to a record low of 2 percent, citing concerns over the failure of inflation to lift into its 1-percent to 3-percent target band.

An economic update from the ASB Bank on Friday said that while the retail sales figures suggested consumers were starting to loosen their wallets, retail price pressures were non-existent.

The ASB continued to expect the RBNZ would shave another 25 basis points off the official cash rate in November, given the outlook for muted inflation across the country. Endit