The retail sales in New Zealand fell third time in a row during July-September 2008 on account of high commodity prices, increasing home prices and tight lending conditions.
As per the Statistics NZ, New Zealand retail sales dropped for the third consecutive quarter during July-September 2008, as reported by RTTNews
The total retail sales in New Zealand plunged 3.7% in the third quarter of 2008. Seasonally-adjusted sales value dropped 0.1% in the same quarter and sales volume was recorded at 0.9%. The highest decline in retail sales was posted by automobile industry at 3.1%. Excluding all automobile transactions from total sales volume, the core retail sales volume was down 0.2% on quarter. Supermarkets and grocery stores led the decline in volume (down 1.9%). Sales value remained stagnant throughout 2008.
As the commodity prices at fuel stations and supermarkets increased, consumers cut down their spending significantly, leading to fall in retail sales during third quarter of 2008. Inflation rate too was registered at 4% in the second quarter against the 1 to 3% target set by the central bank. Moreover, the country’s domestic economy is facing slowdown, further pressurizing the retail sales.
In addition, retail sales are expected to get worse with deepening recession in New Zealand. Even high interest rates are predicted to push the New Zealand retail sector into gloom.
According to industry experts, the falling sales indicate towards the obstacles looming before the retail sector. Households cut down their spending in the wake of high interest rates and soaring food prices and fuel prices.
Moreover, industry experts believe that the ending months of 2008 will not be enthusiastic for the retail industry. Layoffs by the companies to balance liabilities and assets along with falling home prices present a grim outlook of the New Zealand retail industry for the first half of 2009.
According to a Research Analyst at RNCOS, “New Zealand’s retail industry is imitating the trend being shown by the retail industries of other countries; falling sales amidst bad economic environment. And increased household prices have made the situation worse. Retailers are unlikely to see any change in the situation, as the sales are expected to keep falling in coming few months.”
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