Statistics New Zealand says retail spending spending rose across a majority of retail industries, with the largest contribution coming from consumables - probably influenced by rising prices

Retail spending rose 1.4% on a seasonally-adjusted basis in September, Stats NZ says.

Spending rose across "a majority" of retail industries, with the largest contribution coming from consumables, up $20 million (0.8%). Consumables include items such as groceries (supermarkets) and liquor.

"People continued to spend more on items such as food and liquor. This is the third consecutive monthly increase for consumables," Stats NZ's business performance manager Ricky Ho said.

"We’ve seen food prices going up in the past few months, which can impact card spending on groceries."

By spending category, the movements were:

• consumables, up $20 million (0.8%)
• apparel, up $15 million (4.3%)
• fuel, up $12 million (2.0%)
• motor vehicles (excluding fuel), down $2 million (0.9%)
• durables, down $10 million (0.6%).

Stats NZ is due to release Food Price Index figures for September on Thursday (October 13). The August figures showed annual food price inflation hitting a 13 year high of 8.3%.

This will be one of the last significant (along with rental information) pieces of economic data to be released ahead of the Consumers Price Index (inflation) figures set for release on Tuesday, October 18.

All eyes will then be on whether annual inflation reduces from its 30-year high of 7.3% as of the June quarter. 

The 1.4% rise in spending in September was more than the 0.4% that Westpac senior economist Satish Ranchhod had picked.

He said much of this month’s gain was again related to an increase in spending on hospitality.

"Spending in the hospitality sector has been boosted by the reopening of the borders and the return of international visitors, including a flurry of visitors from Australia in recent months. Spending in the hospitality sector is now back around the levels that we saw prior to the pandemic."

He said looking at the September quarter as a whole, spending in core (ex-fuel) categories is up about 2.5%.

"Over that same period, we estimate that consumer prices rose by around 1.6%. That still points to solid growth in the volume of goods sold. That’s despite the continued interest rate hikes from the [Reserve Bank]  RBNZ over the past year and the related cooling in the housing market."

Ranchhod said the RBNZ has been raising interest rates for close to a year now to dampen demand and domestic inflation pressures.

"However, to date, we’ve actually seen relatively few signs that demand is softening to the extent that the RBNZ needs to see."

Now that the borders are open and international tourist dollars are flowing back in, overall demand in the economy is proving to be resilient in the face of interest rate hikes, Ranchhod said.

"And that means the RBNZ still needs to do more to dampen inflation pressures. Consistent with that, we recently revised up our forecast for the Official Cash Rate and now expect it to peak at 4.5%, with 50bp hikes in both November and February. "