Recession shows its face - retail sales fall
Updated 3:50PM Friday August 15, 2008

The higher cost of necessities is squeezing spending on other things, according to economists picking over the June quarter retail sales data released today.

The data revealed a "consumer recession" and likely confirmed Reserve Bank of New Zealand (RBNZ) thinking on the economy.

"We continue to expect the RBNZ to cut the official cash rate (OCR) at every meeting into early 2009, taking the OCR down to 6.75 per cent," ASB economists said.

Reserve Bank governor Alan Bollard last month cut the OCR to 8 per cent from 8.25 per cent, the first rate cut in five years.

Retail sales fell a seasonally and inflation-adjusted 1.5 per cent in the June quarter, providing further strong indications that New Zealand is in a recession.

The figure is close to expectations, with the median forecast in a Reuters poll of economists having been for a decline of 1.6 per cent.

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