Retail sales volumes rose a seasonally-adjusted 0.9% in the December quarter - an outcome stronger than economists had forecast.
Statistics NZ said spending on discretionary items had helped to drive the $239 million lift in sales volumes during the quarter.
The 0.9% rise in volumes follows a particularly strong 1.9% rise in the September quarter and provides further evidence that the under pressure retail sector is beginning to recover as the economy strengthens.
Westpac senior economist Satish Ranchhod said the retail figures had "surprised to the upside again".
He said, importantly the increase isn’t just a result of price increases.
"The amount of goods that consumers are actually taking home was up 0.9% in December quarter and is up 4.4% over the past year. That was above our and market forecasts for a 0.6% rise."
Regarding the actual sales figures, the total value of actual sales was $34 billion in the December quarter, which was up 4.9 percent ($1.6 billion), compared with the December 2024 quarter.
The total value of seasonally adjusted retail sales was $32 billion, up 1.4% ($425 million).
Stats NZ notes that actual values are in current prices and not adjusted for inflation or price effects. Seasonally adjusted values have had typical seasonal patterns removed. Volumes have had price changes removed and are expressed in September 2010 quarter prices.
The retail sales figures are the first 'partial indicator' of forthcoming GDP figures for the December quarter (due to be released on March 19) and therefore are a good sign for what the GDP figures might be like.
The Reserve Bank (RBNZ) has forecast that our GDP will have grown 0.5% in the December quarter.
In terms of the retail figures, Stats NZ's economic indicators spokesperson Michelle Feyen said pharmaceutical and other store-based retailing, electrical and electronic goods, and hardware, building, and garden supplies saw the largest increases in activity this quarter.
Twelve of the 15 retail industries had higher sales volumes in the December 2025 quarter compared with the September 2025 quarter.
In terms of the nationwide picture, twelve of the 16 regions had higher retail sales values in the December 2025 quarter compared with the September 2025 quarter, after adjusting for seasonal effects.
Sales in the South Island increased by 2.3% ($180 million) to $7.9 billion, while sales in the North Island increased by 1.5% ($341 million) to $23 billion.
“Hawke’s Bay and Canterbury regions had the highest percentage increase in retail sales this quarter, relative to the previous quarter,” Feyen said.
Westpac's Ranchhod said that while the pickup in spending is an encouraging sign for retailers, in some cases consumers are actually purchasing items from low-cost online/offshore retailers. As a result, many domestic retailers are still facing tough trading conditions. This is a particular issue in sectors like apparel.
He said the Westpac economists are forecasting GDP growth of 0.6% in the December quarter.
"Today’s result was ahead of our expectations, though much of that will relate to imported goods. We’ll take a closer look at how our forecast for GDP growth is shaping up over the next couple of weeks as additional data on December quarter activity is released."
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