Cut-throat retail prices keeps lid on first-quarter inflation
Retailers slash prices in a bid to attract cautious households unwilling to ramp up spending.
New Zealand retailers kept a lid on first-quarter inflation as they slashed prices in a bid to attract cautious households unwilling to ramp up their spending.
The consumers price index rose 0.4 percent in the March quarter, in line with expectations, and was held back by aggressive discounting of household appliances and clothing.
About 22 percent of revenue collected by clothing and footwear retailers was discounted in the quarter and 27 percent of household contents and services were marked down in the period.
"Discounting of household items and clothing was even more aggressive in Q1," ASB economist Jane Turner says in a note. "Discounting was particularly elevated over Q4, and we had expected to see some unwinding of this."
Some 40 percent of major household appliances were discounted in the quarter, the biggest proportion, followed by audio-visual equipment, with 36 percent marked down.
A third of carpets and other floor coverings, and glassware, tableware and household utensils were discounted, and 29 percent of women's clothing was reduced.
Ms Turner says the strength of the kiwi dollar, which recently traded at 84.82 US cents, has held down the cost of imported goods, "and it appears the extent of discounting is even greater than what the currency suggests".
Today's data showed clothing prices fell 0.9 percent in the March quarter and were down 1.2 percent on an annual basis, while household contents prices decreased 1.2 percent in the three months for an annual drop of 2.6 percent.
That discounting may have helped some retailers boost sales, with clothing chain Hallenstein Glasson showing a 6.6 percent gain in sales to $115.7 million in the six months ended February 1 from robust buying in New Zealand.
Homeware and sporting goods chain Briscoe Group increased annual sales of its homeware stores 4.3 percent to $307 million.
(BusinessDesk)
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Cut-throat retail prices keeps lid on first-quarter inflation
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