Retail trade boom over?

Press, 16 May 1985, Page 1

Retail trade boom over?

By

MICHAEL HANNAH

in Wellington Retail trade has slipped back from a boom last year to the pre-price freeze levels of three years ago, according to official figures given yesterday. For the first three months of this year, New Zealanders spent the same on retail purchases as they did in June, 1982, before the price freeze was imposed, and in December, 1983, when there were strong rumours that the price freeze was going to be lifted. This comparison is based on Statistics Department figures, which took account of inflation since 1980, seasonal adjustments and changes in the population.

The figures suggest that the only benefit to retail trade from the price freeze came when there was the prospect of the freeze being lifted, or other price rises were in the air. From January to March this year, retail trade was without any of the stimulation which occurred last year when consumers stepped up buying in anticipation of: • The part lifting of the price freeze in February, 1984. • The flow-on effects of the 20 per cent devaluation last July to new stocks. • The total lifting of the price freeze last November. • The presentation of the Labour Government’s first Budget, also last November.

For most retail outlets, sales peaked in the September quarter last year, as stock sold at pre-devalua-tion prices before new stock was put on shelves. Seasonally and inflationadjusted figures show that retail traders generally had the same level of trade in the first three months of this year as they had before the price freeze was imposed in 1982. No significant gains were made by any particular sector. Seme retailers have lost ground, however. Retailers in the automotive, fuel and repairs category, the accommodation business, and the liquor trade (which includes licensed accommodation) did less business early this year than they did in

December, 1983, when overall retail trade levels were much the same. Over this same period, other official statistics have shown that employment growth was also depressed during the period of the wage and price freeze, with unemployment rates peaking at 83,597 in January, 1984, a month before the price freeze was partly lifted. From the consumer’s point of view, however, the freeze showed obvious benefits in bringing the inflation rate down from 17 per cent in June, 1982, to a low of 3.5 per cent in March, last year. Since the freeze was lifted, the inflation rate has climbed back up to the latest figure of 13.4 per

cent, measured in March, The retail sales figures released yesterday showed that sales were $5083.9 million in the March, 1985, quarter, or 31 per cent higher than a year earlier. Sales adjusted for seasonal fluctuations rose 2.2 per cent between December, 1984, and March, 1985, compared with a rise of 1.2 per cent from September, 1984, to December, 1904. Seasonally adjusted and deflated to remove the effects of price changes, the volume of sales dropped 1.8 per cent between the December, 1984, and March, 1985, quarters. This compares with a drop of 2.7 per cent between the September and December, 1984 quarters.