NZ Retail Sales Rise in Q3 2006

NZ (New Zealand) retail sales rose in third quarter of this year, strengthening the risk of rise in interest rate in near term, according to news published in International Herald Tribune.

As per Darren Gibbs, Deutsche Bank's chief economist, inflation risks remain in economy, as there is not much slowness in domestic demand & consumer spending. Reserve Bank is also looking to curb inflation, which is already higher than expectations.

SNZ (Statistics New Zealand) data indicates that retail sales rose by 1 % compared to Q2 2006, ahead of 0.8 % forecast by Reuters' economist poll. Year-on-year retail sales were up by 3.2 % in Q3 2006, ahead of 3 % forecast. However, big surprise came as September retail sales were up by 1.2 %, compared to August, as economists predicted no change in retail sales for September.

"The increase in retail sales for September was strong due to tight labor market & strong wage growth and has set up the pace for the Q4 sales, which are likely to be overwhelming," said an analyst at RNCOS.

Retail sales increase is attributed to comprehensive increases in food & beverage industries that account for nearly 50% of total retail sales in New Zealand. Restaurants, cafes & supermarkets also fared well. Appliances retailing also grew in Q3, increasing by 4.8 % compared to Q2 2006.

NZ dollar increased to US 66.24 c from US 65.91 c. NZ dollar is the best performing currency in the world among major currencies, gaining 4.3% against US$, due to demand for higher interest rates in the country.

Economists are expecting that central bank will await further results before planning to hike the interest rates. Reserve Bank left the rates unchanged at 7.25 % for October.

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