Retail spending fell for the sixth month in a row in July according to Statistics New Zealand but only by 0.1% or $6.3 million with total electronic card expenditure for the month coming to $8.8 billion

The steady slump in retail spending that New Zealand has experienced in the past six months is slowing down according to the latest sales figures from Statistics New Zealand.

July marks the sixth month in a row that electronic spending throughout the country has fallen – but it’s also the smallest decrease in that time as well. 

Overall spending on cards fell 0.1% or $6.3 million in July on a seasonally-adjusted basis, according to Stats NZ on Thursday.

This is lower than a month earlier in June when card spending fell by 0.6% or $40 million on a seasonally-adjusted basis.

In the last six months, total retail spending figure movements have fallen by, in order, 0.8%, 0.7%, 0.4%, 1.1%, 0.6% and now just 0.1%.

Stats NZ said on Thursday that core retail spending – which doesn’t include fuel and vehicles – fell by 0.5% or $26 million in July.

During the month of July, cardholders made a total of 161 million transactions across all industries, averaging $55 per transaction, resulting in electronic card expenditure of $8.8 billion.

This is up slightly from June, when cardholders made a total of 157 million transactions across all industries, averaging $55 per transaction, resulting in electronic card expenditure of $8.5 billion. 

Stats NZ said seasonally-adjusted specific movements by retail spending category in July 2024 included:

• hospitality, down 1.4% or $17 million
• apparel, down 2.1% or $6.5 million
• durables, down 0.4% or $5.7 million
• consumables, up 0.2% or $4.5 million
• motor vehicles (excluding fuel), up 2.7% or $5.1 million
• fuel, up 1.6% or $8.1 million

During July, the non-retail sector (excluding services), which includes medical and health care, travel and tour arrangements, postal and courier services, and other non-retail industries, was up 2.1% or $47 million compared to June 2024.

Stats NZ said services spending which covers repair and maintenance, personal care, funeral services, and other personal services also rose 0.7% or $57 million from June.

The latest electronic card data from Stats NZ on Thursday follows the Reserve Bank of New Zealand (RBNZ) cutting the Official Cash Rate (OCR) by 25 basis points on Wednesday.

The RBNZ brought the OCR down to 5.25%. The OCR had sat at 5.50% since May 2023.

The central bank had previously forecast that it wouldn’t be reducing the OCR until the second half of 2025. But as of its August MPS on Wednesday, the RBNZ is now forecasting that the OCR will be cut again at least once before the end of the year and more cuts are expected across 2025. 

The RBNZ expects the OCR forecast next year to finish under 4% as well – which is a U-turn from the picture that the RBNZ painted in its May MPS where the possibility of a hike in the OCR before the end of 2024 was seen as 60%.

The RBNZ has also changed its inflation forecasts and now expects annual inflation to be 2.3% by the end of the September quarter.

Westpac Senior Economist Satish Ranchhod said the 0.1% drop in retail sales was a “little firmer” than Westpac's forecast for a 0.3% rise in retail sales during July. 

“Looking at the details, the continued pressures on household finances was evident. While spending on food and petrol was up in June, spending in discretionary areas continued to drop,” he wrote in an economic note on Thursday afternoon.

“Looking forward, households’ purchasing power will get a boost from tax cuts and other support measures, as well as falls in interest rates. But with borrowing cost still at high levels and the labour market weakening, spending is likely to remain subdued through the final months of the year.”