Stats NZ says retail card spending dropped 1.6% on a seasonally adjusted basis in January after growing strongly in December

It was back into reverse gear for retail spending in January following a strong surge in December.

Stats NZ says that total retail spending in January was down 1.6% compared with the previous month on a seasonally-adjusted basis.

This fall followed an upwardly revised spike of 2.4% in spending in December.

It's been a tough year for the retailers, with at one point six consecutive month of sales falls recorded earlier in 2024.

But while the latest figures are a step back after the strong surge in December, comparison of actual figures with January 2024 suggests the signs of a fledgling recovery in spending are intact. But the word 'fledgling' needs emphasising.

Total actual retail sales for January 2025 were down 0.5% on the figures for the same month a year ago. And while that doesn't look (and isn't) great - particularly not when inflation is considered - the month-on-month fall is actually the smallest recorded in nearly a year.

The last time a year-on-year monthly growth percentage was recorded was in February of last year.

Carolyn Young, chief executive of the retail industry body Retail NZ, said while retailers saw some benefit from the customary Christmas rush and the Boxing Day sales, consumers are continuing to be careful with their spending.

"Retail NZ members are telling us that their profitability continues to be eroded by big increases in business costs, particularly rates and insurance. Today’s data shows that price increases as a result of inflation and the post-Covid surge in population are not translating into higher incomes for retailers," she said.

"We look forward to seeing a further cut in interest rates following next week’s OCR [Official Cash Rate] announcement, as well as outcomes from the Government’s new focus on economic growth, to give consumers more confidence to spend."

Westpac senior economist Satish Ranchhod said that stepping back from the "normal month-to-month volatility", the longer-term trend in spending is looking more positive.

"Spending has been trending higher since July, and spending in discretionary areas (like durables, apparel and hospitality) is up more than 3% on the lows we saw last year," he said.

He expects retail spending will continue to "trend higher" over 2025 with the financial pressures that households have been wrestling with easing, and with inflation dropping back and interest rates falling.

"Importantly, even though interest rates have been falling for several months, most of their impact is yet to be felt. Many mortgages are yet to come up for refixing. In addition, many borrowers have chosen to roll on to relatively higher cost floating rate or shorter-term mortgages in anticipation of further mortgage rate cuts. However, around 54% of mortgages will reprice over the next six months, giving borrowers the opportunity to secure a lower rate. That could see sizeable falls in households’ debt servicing costs and boost their disposable incomes," Ranchhod said.

Returning to the seasonally-adjusted figures for January 2025, Stats NZ said spending on core retail (excluding fuel and vehicles) was down 1.5% compared with December.

By retail spending category, movements were:

• durables, down $42 million (2.6%)
• consumables, down $20 million (0.7%)
• apparel, down $3.3 million (1.0%)
• hospitality, down $2.9 million (0.2%)
• fuel, up $0.9 million (0.2%)
• motor vehicles (excluding fuel), up $5.9 million (3.2%).

The non-retail (excluding services) category increased by $37 million (1.6%) from December 2024. This category includes medical and other health care, travel and tour arrangement, postal and courier delivery, and other non-retail industries.

The services category was up $6.8 million (1.8%). This category includes repair and maintenance, and personal care, funeral, and other personal services.

The total value of electronic card spending, including the two non-retail categories (services and other non-retail), was essentially flat from December 2024.

In actual terms, cardholders made 166 million transactions across all industries in January 2025, with an average value of $56 per transaction. The total amount spent using electronic cards was $9.307 billion.

In January 2024 there were 165 million transactions, with an average of $56 per transaction, and a total of $9.164 billion.