Reserve Bank right as retail flat-lining

Media release
Newmarket Business Association
Thursday, 30 July 2009

Reserve Bank right as retail flat-lining not free falling

“At worse retail is flat-lining. We’re certainly not freefalling. Given the recession is now 18 months old, businesses are increasingly thinking that we’ve bottomed out and things are only going to get better over the next 12 months,” says the head of Auckland’s leading retailing district.

Cameron Brewer of the Newmarket Business Association’s comments follow the Reserve Bank’s announcement today that it is holding the Official Cash Rate at 2.5%. He says the Reserve Bank has got it right.

“The latest business confidence surveys show people are feeling more positive about the next 12 months. While Statistics New Zealand observes that while ‘the total retail sales trend has been falling since January 2008’ most interestingly it ‘has flattened in the past four months.’”

Mr Brewer says it is not surprising that New Zealanders’ spending is flat-lining not freefalling when you consider the different ways the consumer has benefitted in recent months.

“If you’re one of the 2.1 million Kiwis currently employed, life is arguably better than it was.

“The likes of interest rates on credit cards have fallen, the price of consumerables is down hence inflation has slowed to 1.9%, and we had two rounds of tax cuts in October and April. The end result is that most salary and wage earners arguably have more discretionary income than 12 months ago. However the missing ingredient is of course consumer confidence but that will follow."

Mr Brewer says the fact that fewer Kiwis are travelling abroad this winter has been a boost for local retailers. As is the fact that increasing numbers of Kiwis are permanently returning home from overseas. A cold and early winter has also been a positive for a number of retailers.

ENDS

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