Monthly retail spending figures ended the year on a stronger footing after much weakness in spending throughout 2024

Retail spending surged 2% in December on a seasonally adjusted basis - providing a lift for retailers at the end of a really tough year.

The latest figures, as released by Statistics NZ, follow, a flat result in November and a sequence of six consecutive falls in monthly sales earlier in 2024.

The strong rise in December, which was much biggest monthly rise in 2024, is somewhat at odds with the latest BNZ – BusinessNZ Performance of Services Index (PSI), which showed an increased rate of contraction.

And it should be pointed out that while the seasonally-adjusted retail sales figures for December were up 2%, the actual figures, when compared with December 2023 were down by 1.0%. This point demonstrates how tough it has been in retail in the past year.

Stats NZ said that on a seasonally-adjusted basis in December the 'core' retail sales, which exclude fuel and vehicles, rose 1.8%.

The total value of electronic card spending, including non-retail categories was up 1.5%.

In actual terms, cardholders made 183 million transactions across all industries in December 2024, with an average value of $58 per transaction. That's the same value per transaction as was seen in December 2023, and was up on the $56 per transaction recorded in November 2024.

The total amount spent using electronic cards was $10.618 billion, up slightly from the $10.588 billion recorded in December of 2023 - although that figure came from slightly fewer individual transactions, at 182 million.

In terms of the highlights in the seasonally-adjusted December 2024 figures, Stats NZ said by retail spending category, movements were:

• durables, up $57 million (3.7%)
• consumables, up $36 million (1.4%)
• fuel, up $19 million (3.8%)
• hospitality, up $12 million (1.0%)
• apparel, up $10 million (3.1%)
• motor vehicles (excluding fuel), down $2.4 million (1.3%).

Westpac senior economist Satish Ranchhod said the rise in spending in December was the largest monthly rise since early 2022 when Covid-related activity restrictions were eased. 

While some of the strength in the December spending figures might prove to be temporary, it still points to a firming in households’ spending appetites.

"Taking a longer-term perspective, the more general trend in retail spending over the past few months is to the upside, with spending levels having risen for the past five months," he said. 

"Looking to 2025, we’re expecting spending will continue to trend higher. The financial pressures that households have been wrestling with are easing, with inflation dropping back and interest rates falling. Over time, those easier financial conditions will support further increases in spending and will also boost the housing market. 

"However, going forward we expect the recovery will be more gradual than December’s sharp lift in spending, particularly as it takes time for interest rate reductions to ripple through the economy. 

"It’s also important to remember that inflation and borrowing costs are heading back towards historic averages, rather than very low rates. As a result, we’re forecasting more ‘normal’ increases in spending over 2025, rather than a very strong lift," Ranchhod said.

Retail industry body Retail NZ said the Government’s "new economic growth agenda" can’t come soon enough for the "beleaguered retail sector".

It noted that total retail sales were down 1% compared with the December 2023 figures and said the latest figures meant that sales for all of 2024 were down 2.2% compared to 2023.

Retail NZ chief executive Carolyn Young said while retailers saw some benefit from the customary Christmas rush and the Boxing Day sales, consumers were being careful with their spending.

"There was a small increase in sales of consumables but durables and apparel both fell, compared to the same time in 2023," she said.

"Profitability will continue to be a major challenge for retailers as we head into the new year. We are looking forward to seeing the benefits of the Government’s new focus on economic growth, to put more money in customers’ wallets."