Falling petrol prices don't appear to have given too much of a lift to spending patterns and it's still looking like a tough environment for the retailers.
Retail spending as measured by Statistics NZ's electronic cards transactions data dropped in May by 0.2% on a seasonally adjusted basis after being flat in April.
Sales of fuel were a significant part of this, down 2.4%.
But even after excluding fuel prices, the 'core' retail industries were also down collectively 0.2% on a seasonally-adjusted basis.
These were the moves:
- fuel, down $12 million (2.4%)
- durables, down $8.1 million (0.5%)
- consumables, down $1.6 million (0.1%)
- apparel, up $0.2 million (0.1%)
- hospitality, up $1.7 million (0.1%)
- motor vehicles (excluding fuel), up $5.0 million (2.6%).
Westpac senior economist Satish Ranchhod said the softness in spending appetites "is especially notable given the fall in petrol prices which should have put more money back into people’s pockets to spend elsewhere".
Stats NZ said the non-retail (excluding services) category increased by $34 million (1.5%) from April 2025. 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 down $0.7 million (0.2%). 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), therefore increased, on a seasonally-adjusted basis from April 2025, by $31 million (0.3%).
In actual terms, cardholders made 166 million transactions across all industries in May 2025, with an average value of $54 per transaction. The total amount spent using electronic cards was $9.0 billion.
For the same month in 2024 cardholders had made 164 million transactions across all industries and the total spend was just under $9 billion.
In May 2025 the average value per transaction was $54 - and this was down from $55 in May 2024.
Looking at just the retail industries and comparing these with May 2024 paints a perhaps slightly more encouraging picture.
In May 2025 core retail spending was up 2.1% compared with May 2024, while total retail spending was up 0.9% compared with May 2024. These two month-on-month rises are actually the biggest such rises since February 2024.
Westpac's Ranchhod said he expects the retail situation will start to turn around through the latter part of the year.
"Around half of all mortgages will come up for repricing over the next six months, and many borrowers will be able to refix at much lower rates. Compared to this time last year, fixed term mortgage rates are around 170 to 200bps lower. That will put a sizeable amount of cash back into many households’ wallets.
"The related increases in disposable income levels will be a boost for spending. Even so, as the softness in today’s spending figures highlights, it looks like recovery will be gradual," he said.
6 Comments
Who wudda thunk it? If oil prices get going, we will be totally screwed.
The Govt have zero economic strategy. It is getting ridiculous now.
Maybe people will look at their new CV and feel rich?, Yeah Right!
Just cut more costs. It's their one trick pony.
And interest rates have hit their bottom apparently. We're going to sit on our hands in these conditions?
Around half of all mortgages will come up for repricing over the next six months, and many borrowers will be able to refix at much lower rates. Compared to this time last year, fixed term mortgage rates are around 170 to 200bps lower. That will put a sizeable amount of cash back into many households’ wallets.
I remember very similar commentary around a year ago claiming this was happening from Q1 2025.
It is plainly obvious that the Cost of Living is rising higher than headline inflation. As people have less to spend their relative weight of this spending goes into necessities which are what is rising in price the most - butter, milk, meat, rates and insurance etc. This means they have less to spend on other items. Only the flat oil prices are saving another return into deeper spending recession. I'd hazard a guess the drop in rates and lower mortgage costs won't be enough to counteract the combined increase in staples for the majority of households.
The train wreck continues.
Wait until USA demand lowers as their cost of living continues to rise, and their markets see a low draining of capital to other more profitable and stable markets.
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