N.Z. December Debit, Credit Card Spending Falls 0.9%

New Zealand consumer purchases on debit, credit and store cards fell in December, adding to the case for central bank Governor Alan Bollard to delay raising interest rates until the middle of the year.

The value of transactions on electronic cards declined 0.9 percent from November, when they rose a revised 1 percent, Statistics New Zealand said today in Wellington. Excluding spending at fuel outlets and car workshops, transactions fell 1.6 percent.

Lower spending and house prices add to signs economic growth was sluggish in the final three months of the year, after gross domestic product unexpectedly shrank 0.2 percent in the third quarter. Bollard may delay raising the official cash rate from 3 percent until the third quarter as he gathers more signs the nation’s recovery is sustainable.

“Domestic demand has flat-lined,” Annette Beacher, head of Asia Pacific research at TD Securities in Singapore, said in a report yesterday. “Our central case is the Reserve Bank could leave the cash rate unchanged until at least July.”

Beacher said the economy contracted in the fourth quarter, putting New Zealand into a second recession in three years. The risks are skewed toward unchanged cash rates for the entire year, she said.

House Prices

House prices fell 0.9 percent in December from the year- earlier month, the first annual decline since September 2009, Quotable Value New Zealand said today in an e-mailed statement.

“Without significant changes in the wider economy, indications at this stage are that there are unlikely to be any dramatic changes in the property market in 2011,” said Jonno Ingerson, research director at the Wellington-based government valuation agency. Consumer confidence “will need to improve before the market returns to some form of normality,” he said.

Warehouse Group Ltd., New Zealand’s largest discount retailer, last week forecast a decline in first-half profit after sales in the two months ended Jan. 2 fell 2.7 percent from a year earlier.

“Retail sales in general have been very soft over this key seasonal trading period,” Chief Executive Officer Ian Morrice said in a statement on Jan. 5. “Consumers clearly remain even more focused than we predicted on strengthening household balance sheets.”

The decline in card spending was broad-based with the exception of fuel, today’s report showed.

Consumable goods such as food and liquor, which make up more than a third of the total, declined 0.6 percent from November. Spending on furniture, appliances and other durable goods dropped 1.2 percent. Hospitality and apparel sales also fell. Fuel sales increased 3.3 percent.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net.

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