Shoppers went wild in February, but the Reserve Bank is expected to lift interest rates this month to tame the $5 billion shopping spree.
Likely higher interest rates sent the Kiwi dollar to almost its highest point since the mid-1980s, at US73.4 cents late yesterday, increasing the pain for some exporters.
In February, shoppers hit supermarkets, appliance stores for things like TVs and DVD players, and cafes and restaurants especially. National sales jumped almost 2 per cent to $5.3 billion, almost $100 million better than January, adjusted for usual seasonal patterns.
The rise, the biggest monthly jump in three years came as a big surprise to market-watchers. Bank of New Zealand economists said: "Households continue to spend like there is no tomorrow", adding to inflationary pressure. Wellington regional sales rose strongly in January but were only up slightly more in February.
Waikato enjoyed bumper sales as dairy prices hit record levels. The national sales jump was much more than expected, with increased sales for almost all store types. Sales could keep rising with a recent 10 per cent lift in minimum wages, higher benefit payments and the latest instalment of Working for Families payments.
Supermarket sales were up $25 million, while sales in appliance stores (up almost 6 per cent) and cafes and restaurants combined were up just as much. Some bank economists said the figures made it "100 per cent" likely Reserve Bank governor Alan Bollard would lift interest rates soon, mostly probably at the end of this month. Another rate rise was also possible in June, adding to last month's.
That is more bad news for borrowers, especially first-home buyers facing annual price increases of close to 10 per cent. A rate rise would push floating mortgage rates above 10 per cent for the first time since 1998. If two rates rises happen, many fixed rates are set to exceed 9 per cent.
As well as rising interest rates, petrol prices also jumped last month. Some bank economists expect other retail sales to pull back in March. Wellington department store Kirkcaldie Stains managing director John Milford said sales had been buoyant till February, but warm weather in March and April slowed clothing sales.
Autumn and winter clothes did not start selling till March, when colder weather normally hit. "It is amazing today - the cold-weather departments like ladies' hosiery are run off their feet. The weather does have an impact.
" The rise in national supermarket sales may reflect higher food prices, but the big chains are also moving into other products, such as televisions and other electronics. Higher appliance store figures reflect rising numbers of flat-screen plasma and LCD TVs, and DVD players, being sold. They are getting cheaper as world prices fall rapidly, down 20 per cent or more in the past year, a retailer said, meaning shops had to sell more to maintain profits.
Total retail sales were more than 6 per cent above the same month last year, for both January and February.
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