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New Zealanders spent less on credit, debit cards in June

Monday 21st July 2008

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New Zealanders spent less on their credit and debit cards last month adding to signs the economy has slipped into recession amid surging prices and high borrowing costs.

Retail electronic card transactions fell 0.4% in June from May, seasonally adjusted, Statistics New Zealand said in a statement. Excluding motor vehicles and fuel, core retail transactions fell 1.2%

"The signs of retail recession are accumulating," said Shamubeel Eaqub, director of Australia & New Zealand research at Goldman Sachs JBWere (NZ). A central bank interest rate cut this week is "a line ball call" though a cut in September "is absolutely necessary."

Retailers including Warehouse Group Ltd. and Briscoe Group have cut their profit forecasts citing a drop in consumer demand amid higher prices for fuel, food and credit. A net 27% of people in a One News Colmar Brunton Poll this month expect the economy to worsen in the next 12 months, a deterioration from the 25% figure in June.

There were 80 million electronic card transactions with New Zealand merchants worth NZ$4.3 billion in June, up from 77 million, or NZ$4.2 billion in the same month last year, Statistics New Zealand said.

In the year to June 30 there were 1 billion transactions worth NZ$55.2 billion, compared with 923 million worth NZ$51.2 billion a year earlier.

The central bank will keep the official cash rate unchanged at 8.25% at its review this Thursday, according to nine of 12 economists in a Good survey last week. Three predict a 25 basis points cut. Of those picking no change this week, six economists say the bank will move on September 11.

By Jonathan Underhill

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