An Air New Zealand Plane Flies Over Mount Victoria
IN PHOTO: An Air New Zealand plane flies over houses in Mount Victoria as it approaches Wellington airport, October 7, 2011. Reuters/Marcos Brindicci

New Zealand retail spending had increased in the fourth quarter of 2014. Kiwis spent more money on vehicle-related purchases, food and beverages. The high retail sales may have been buoyed by a growing jobs market and cheap credit.

Retail sales in the country rose to 1.7 percent in the fourth quarter ending in December, according to Statistics New Zealand. Economists expect strong consumer spending to continue amid the low cost of credit and a strong jobs market. Sales for consumer products rose while core retail sales on debit and credit cards increase 0.9 percent in January.

TVNZ reports that Reserve Bank of New Zealand governor Graeme Wheeler noted the drop in the unemployment rates, positive business and consumer sentiment had downplayed the possibility of cutting interest rates. RBNZ has maintained interest rates at 3.5 percent since Sept. 2014. The retail sales data is in line with economic indicators suggesting a solid growth in New Zealand’s economy.

A Reuters poll suggests a strong consensus on an interest rate hike during the first half of 2016. Market prices indicate a 12 percent chance of interest rate cuts in March.

Out of 15 retail industry types, 12 had reported an increase in sales in the last quarter. Sales in vehicles and auto parts rose to 3.4 percent while clothing, footwear and accessories increased 4.4 percent. Accommodation gained 4.6 percent as sales in food and beverage climbed 3 percent.

Meanwhile, the Australian dollar is almost at a record low against the kiwi following strong retail spending in New Zealand. On Feb. 16, the Australian dollar fell to as low as 103.68 New Zealand cents from 104.47 cents last Feb. 13. AAP reports that the lowest value the Australian dollar had traded against the kiwi was at 103.55 cents.

Westpac senior currency strategist Sean Callow said the Australian dollar was not far from the record as it will only take less to move closer to that level. The kiwi rose after strong December quarter retail sales.

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