Electronic cards data for July shows that seasonally adjusted retail spending rose for the second consecutive month, with gains in hospitality and consumables somewhat offset by continued weakness in durables and apparel

It's a long, slow, journey, but retail spending is showing tentative signs of recovery.

According to Statistics NZ's electronic cards transactions data seasonally-adjusted card spending in the retail industries increased 0.2% ($13 million) in July.

This was the second consecutive rise (albeit small), but it's undoubtedly a faltering and fragile recovery. And in fact, core spending, excluding fuel and vehicles, was flat month-on-month.

By retail spending category, movements were:

• consumables, up $14 million (0.5%)
• motor vehicles (excluding fuel), up $10 million (5.2%)
• hospitality, up $7.2 million (0.5%)
• fuel, down $0.6 million (0.1%)
• apparel, down $6.4 million (1.9%)
• durables, down $13 million (0.8%).

It's been a very rough time for retailers. However, comparing the July actual figures with those for the same month in 2024 shows that sales were up 1.7%. Now, of course that's not adjusted for inflation - but it is the first such rise since January of this year - and that was a rise of just 0.1%.

Carolyn Young, chief executive of retail industry body Retail NZ noted that the actual sales figures included an increase of 3.7% in spending on consumables from July 2024, "which reflects increasing prices rather than increased transactions".

“We know that consumers are continuing to be careful with their spending and we have yet to see the boost expected from lower interest rates as more consumers are set to re-fix mortgages. Low consumer confidence is still limiting sales and retailers are keenly awaiting improvements."

The number of transactions compared with July 2024 was up (140 million to 138), however, the value per transaction was down slightly at $54 versus $55 a year ago.

Back on the seasonally adjusted figures, Stats NZ said the non-retail (excluding services) category increased by $35 million (1.6%) from June 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 up $1.3 million (0.3%). 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), increased from June 2025, up $59 million (0.6%).

Westpac senior economist Satish Ranchhod said that as well as continued cost of living pressures, households remain cautious about their spending in the face of a softening labour market and rising unemployment. 

"With continued cost of living pressures, a softening labour market and low levels of confidence, spending growth will likely remain modest over the next few months. Spending in discretionary areas in particularly is likely to remain soft, which will be a challenge for businesses in sectors like hospitality," he said.

However, he said there is relief coming for many households. 

"...The large interest reductions over the past year are gradually working through their way through the economy. Compared to this time last year, fixed-term mortgage rates are around 170 to 200bps [basis points] lower. The full impact of those declines is yet to be felt as most New Zealand mortgages are fixed for a period," Ranchhod said.

"But over the next six months, around half of all mortgages will come up for refixing, giving many borrowers the chance to secure a much lower rate. The related increases in disposable income levels will be a boost for sentiment, and that should support a gradual recovery in spending as we approach the end of the year."