New Zealand's retail sales unexpectedly fell in June as record-high interest rates curbed consumer spending. The nation's currency slumped to a 10-week low.

Retail sales declined 0.4 percent from May, when they rose 1 percent, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg News survey of 12 economists was for a 0.4 percent gain. It was the second drop in three months.
Reserve Bank Governor Alan Bollard last month raised the benchmark interest rate to 8.25 percent as record wage increases and an all-time low jobless rate stoked inflation.
Falling sales suggest four increases in borrowing costs since March may be sufficient to cool the economy and curb price increases.
“It looks like we are seeing some signs of moderation from the consumer,” Iid Cameron Bagrie, chief economist at ANZ National Bank Ltd. in Wellington.
The housing market's clearly easing, retail spending looks like it's starting to soften, so it's all welcome news for the Reserve Bank.
New Zealand's dollar fell to 73.19 U.S. cents at 05:05 P.M. in Wellington from 73.93 cents immediately before the report, the lowest since May 31.
It has slumped 9.6 percent against the U.S. dollar and 12 percent against the Japanese yen in the past two weeks as concerns about losses in the subprime mortgage market prompt investors to reduce risky assets.
The chance of a rate increase at Bollard's next review on Sept. 13 fell to 4 percent from 14 percent, according to an index calculated by Credit Suisse. All 14 economists surveyed by Bloomberg News expect he will keep the benchmark rate unchanged for the rest of this year.
---------------Quarterly Sales
Sales excluding inflation, a measure of volumes, unexpectedly dropped 0.6 percent in the three months ended June 30, the first decline in six quarters. Economists expected a 0.1 percent increase. Sales volumes grew a revised 3.7 percent in the first quarter, the strongest pace since the series began in 1995.
Sales volumes excluding vehicles and fuel sales fell for the first time in more than seven years, the agency said.
Bollard on July 26 said his interest-rate increases may be sufficient to contain inflation, provided consumers borrow less.
House sales fell to an 18-month low in July, the Real Estate Institute of New Zealand Inc. said on Aug. 9. A cooling housing market makes consumers less willing to borrow and spend. The proportion of consumers expecting the economy will weaken in the next year rose to 42 percent this month, the highest this year, according to a Television New Zealand poll published yesterday.
Bollard raised interest rates in the first half of 2007 to counter a surge in spending buoyed by rising wages and house prices, and a 9.8 percent gain by the New Zealand dollar, which made imported cars and appliances cheaper.
Wages for non-government workers climbed a record 3.2 percent in the second quarter from a year earlier, according to an Aug. 7 report. The jobless rate fell to 3.6 percent in the quarter.
House prices were 12 percent higher in June than a year earlier, according to Quotable Value New Zealand, the government valuation agency.
Fourteen of the 24 retail categories surveyed reported lower sales in June, Statistics New Zealand said.
Sales at supermarkets and grocery stores, which make up a fifth of all retail spending, were unchanged from May, the agency said. Sales at vehicle dealers, appliance stores and furniture outlets declined. Department store sales rose. Excluding sales through auto dealers, workshops and gasoline outlets, retail spending fell 0.5 percent from May when it gained 0.5 percent.
In the second quarter, the decline in sales excluding inflation was led by appliance retailing, vehicle dealers, accommodation, bars and restaurants, the agency said. Appliance sales volumes slumped 5.5 percent, the first drop in almost two years. Vehicle sales volumes fell 1.3 percent.
Excluding sales through auto dealers, workshops and gasoline outlets, retail spending dropped 0.8 percent from the first quarter, when they rose a record 3.6 percent. That's the first decline in core sales volumes since the first quarter of 2000.
(Source: Bloomberg