Vehicle and fuel sales led a 0.8% ($42 million) rise in retail sales in January, Statistics New Zealand announced this morning.

The result follows an unexpectedly bad result for December, when total sales fell 0.4%. The average expectation from market economists for the latest result was for a rise of 0.5%.

“Core retail” – that is, sales without the four vehicle related categories – rose 0.3% ($12 million). The vehicle sales group tends to be volatile because it contains the always-erratic fuel prices and also the large “lumpy’ vehicle sales groups.

However, the trend has been steady since the middle of last year: fuel retailing is up 8.4% since July, while vehicle retailing has been rising steadily since March and is up 10.6% since then.

Within the core retail sector group, recreational goods were the main contributors, up 4.8% ($9 million). The significance of this is that it does not appear to be a one-off: sales of recreational goods have been rising steadily since August 2008, despite the recession, and are up 8.1% since that time. The trend for this part of retail is at its highest since the series began in May 1995.

However the largest single retail sector – supermarket and groceries – has been falling and is down 2.3% since August last year.

Overall, the latest retail result represents a return to pre-recession levels, with a return to trend levels last seen in February 2008.

There has been a slight flattening of core retail sales since spring last year, but it is expected that, with GST rises planned by the government later this year, there will be a pick up in sales as people bring purchases forward.