NZ Retail Slump Fuels Expectations for RBNZ Rate Hike

New Zealand's retail sales volume unexpectedly dropped by 0.5% in Q2, according to figures released recently. The decline was driven primarily by a slump in fuel and motor vehicle-related categories.

However, core retail sales volume, which excludes volatile items, rose by 0.7% in the same quarter, indicating resilient domestic demand activity.

The Reserve Bank of New Zealand (RBNZ) is set to make its next policy decision on September 2, including a fresh Monetary Policy Statement, and markets have virtually fully priced-in a 25bps hike to 2.75%.