New Zealand's tourism bonanza showed no signs of abating, ASB economist Daniel Snowden said yesterday.
Core retail card spending increased in April and remained at high levels, Statistics New Zealand figures showed.
"After March's slowdown, consumers once again hit the shops in April.''
The month's spending grew 0.9%, up 0.1% on March and outstripping the 0.5% expected by the market, Mr Snowden said.
Annual spending growth was 7.8%.
The impact of higher petrol prices in the month was evident, with spending on fuel rising to 1.8% month-on-month, although it did not dent consumer spending overall.
The timing of Easter could have influenced growth in March and April, with the former losing two trading days to the public holiday, boosting April in comparison. The impact could also be one of the reasons for the move higher in apparel, which climbed out of negative territory to record a 0.6% monthly improvement.
The hospitality sector was showing the benefits of New Zealand's continuing tourism boom, with spending in the sector up 1.5% in the month. The sector once again had the strongest growth of core components and, on an annual basis, outshone last month's impressive 12% to hit 14% - an eight-year high.
"There is little to suggest there will be any fundamental deceleration in spending in the sector. We expect retail spending growth to remain healthy over 2016,'' Mr Snowden said.
Westpac senior economist Satish Ranchhod said low borrowing rates and the strength of the housing markets were also providing domestic consumers with a powerful shot in the arm.
He expected some softening in spending as lower earnings in the dairying sector started to bite.
Meanwhile, prices in the ANZ Monthly Inflation Gauge rose 0.1% in April, consistent with seasonal norms. Prices in the gauge were up 0.9% quarter-on-quarter and annual inflation from the gauge rose to 1.9%.
Price increases in the gauge were again driven by lifts in the housing group. April was the seventh consecutive month of increases for construction costs and dwelling rents, confirming pressures from the sector had extended, ANZ chief economist Cameron Bagrie said.
Stripping out the housing group depicted a benign inflationary backdrop, with prices down 0.1% for the underlying ex-housing gauge. The three-month increase from the measure was down 0.1%, the lowest increase so far this year.
In the month, downward impetus was provided from accommodation tariffs and insurance, with both coming after earlier increases.
"With inflationary nuances still low, the path remains open for the official cash rate to move lower still.''
In a normal environment, the combination of housing largesse, booming migration, leveraging behaviour and decent activity growth would result in a solid and building inflationary pulse, he said. The fact nothing of the sort was detected - outside housing - continued to support the notion there had been a structural shift in the evolution of inflation.
