It was back into reverse gear for retail spending in January following a strong surge in December.
Stats NZ says that total retail spending in January was down 1.6% compared with the previous month on a seasonally-adjusted basis.
This fall followed an upwardly revised spike of 2.4% in spending in December.
It's been a tough year for the retailers, with at one point six consecutive month of sales falls recorded earlier in 2024.
But while the latest figures are a step back after the strong surge in December, comparison of actual figures with January 2024 suggests the signs of a fledgling recovery in spending are intact. But the word 'fledgling' needs emphasising.
Total actual retail sales for January 2025 were down 0.5% on the figures for the same month a year ago. And while that doesn't look (and isn't) great - particularly not when inflation is considered - the month-on-month fall is actually the smallest recorded in nearly a year.
The last time a year-on-year monthly growth percentage was recorded was in February of last year.
Carolyn Young, chief executive of the retail industry body Retail NZ, said while retailers saw some benefit from the customary Christmas rush and the Boxing Day sales, consumers are continuing to be careful with their spending.
"Retail NZ members are telling us that their profitability continues to be eroded by big increases in business costs, particularly rates and insurance. Today’s data shows that price increases as a result of inflation and the post-Covid surge in population are not translating into higher incomes for retailers," she said.
"We look forward to seeing a further cut in interest rates following next week’s OCR [Official Cash Rate] announcement, as well as outcomes from the Government’s new focus on economic growth, to give consumers more confidence to spend."
Westpac senior economist Satish Ranchhod said that stepping back from the "normal month-to-month volatility", the longer-term trend in spending is looking more positive.
"Spending has been trending higher since July, and spending in discretionary areas (like durables, apparel and hospitality) is up more than 3% on the lows we saw last year," he said.
He expects retail spending will continue to "trend higher" over 2025 with the financial pressures that households have been wrestling with easing, and with inflation dropping back and interest rates falling.
"Importantly, even though interest rates have been falling for several months, most of their impact is yet to be felt. Many mortgages are yet to come up for refixing. In addition, many borrowers have chosen to roll on to relatively higher cost floating rate or shorter-term mortgages in anticipation of further mortgage rate cuts. However, around 54% of mortgages will reprice over the next six months, giving borrowers the opportunity to secure a lower rate. That could see sizeable falls in households’ debt servicing costs and boost their disposable incomes," Ranchhod said.
Returning to the seasonally-adjusted figures for January 2025, Stats NZ said spending on core retail (excluding fuel and vehicles) was down 1.5% compared with December.
By retail spending category, movements were:
- durables, down $42 million (2.6%)
- consumables, down $20 million (0.7%)
- apparel, down $3.3 million (1.0%)
- hospitality, down $2.9 million (0.2%)
- fuel, up $0.9 million (0.2%)
- motor vehicles (excluding fuel), up $5.9 million (3.2%).
The non-retail (excluding services) category increased by $37 million (1.6%) from December 2024. 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 $6.8 million (1.8%). 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), was essentially flat from December 2024.
In actual terms, cardholders made 166 million transactions across all industries in January 2025, with an average value of $56 per transaction. The total amount spent using electronic cards was $9.307 billion.
In January 2024 there were 165 million transactions, with an average of $56 per transaction, and a total of $9.164 billion.
34 Comments
Total actual retail sales for January 2025 were down 0.5% on the figures for the same month a year ago. And while that doesn't look (and isn't) great - particularly not when inflation is considered - the month-on-month fall is actually the smallest recorded in nearly a year.
look look the fall is getting smaller....
Arr, me hearties that OCR is still at a pretty restrictive level there Blackbeard!
if she were at a stimulatory level it might different 🤷🏻♂️
Edit: I will agree though Blackbeard that a lot of people are definitely scarred by what has happened with the rapid change to rates that I agree yep most will use the extra $$ to replenish the household war chest/pay down debt, but some will leak into the economy, & if /when sentiment changes it will pump more dollars around.
100% I think that people carry debt for longer when your economic reason-to-exist relies on it.
You people are so short term and myopic. You cheerlead the Ponzi without understanding what it needs for its own sustainability and the consequences of behavioral shifts.
It's good that people are paying down the mortgages quicker because it takes off some of the heat from those who cheered on the ponzi and made bank from it at the expense of younger generations.
But they also want young people to continue to go out and spend, gives them ammo so they can keep engaging in Boomerism and labelling all young people as frivolous with their finances.
But they also want young people to continue to go out and spend, gives them ammo so they can keep engaging in Boomerism and labelling all young people as frivolous with their finances.
Well yes. That's the contradiction. The youngsters are scorned for too much avo and toast, yet the whole system relies on them to be living paycheck to paycheck. The moralizing about saving doesn't make sense. Damned if they do; damned if they don't.
It may well have stimulated additional activity, the problem is that all the government layoffs last year may have torpedoed any recovery.
Every dollar spent is a dollar earned, and the government just cut how many kiwis are earning dollars off of them. Perhaps an agreeable sentiment overall, but to my eyes it appears idiotic to engage in austerity in an economic downturn rather than govt borrowing and stimulating in the bad times and repaying the debt in the good times. But I subscribe to the Keynesian school of thought far more than the money printer school of thought (also known as “modern monetary theory”).
SKF
but to my eyes it appears idiotic to engage in austerity in an economic downturn rather than govt borrowing and stimulating in the bad times and repaying the debt in the good times
I blame voters for this.
We as voters, like to vote in the government who like to spend! spend! spend! when we feel like we're doing well as a country.
Then when the economy turns bad we cry for help "someone get us out of this hole as fast as possible!"
Interesting, looking at recent records:
- Bolger/Shipley's govt exited leaving net debt of 23.9% of GDP
- Clark/Cullen's govt paid that down to 5.4% of GDP.
- Key/English govt took that back up to 24.6% of GDP. (post-disaster spending)
- The last Labour govt had that back down to under 20% prior to COVID. (down, then during/post-disaster spending)
Careful Rick. Someone might bring up the old "North Atlantic Financial Crisis" and an Earthquake as reasons why debt rose under Key.
Even though the Earthquake had a total estimated loss of $40b (infrastructure, residential & commercial), with $26b of that already being paid out by insurers in 2015. https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/publications/…
It's possible the American banks needed help being bailed out by New Zealand taxpayers though.
On top of the layoffs , 134,000 New Zealanders have left and by their very nature of seeking better returns or better working conditions show they are ambitious and understand that effort is required prior to reward.
Those that obviously have a poor or no work history are content to stay and utilise welfare, the welfare beneficiaries are increasing with a depleted workforce to pay for them..
You'll be astounded at the number of people who ask on the FB Moving To Australia group, what benefits they can get in Australia. They really think they can just go to Australia and go on a benefit. It just goes to show just how embedded the welfare entitlement mentality is amongst New Zealanders. These will be the ones that come back to NZ with their tail between their legs when they realise that no, they are actually expected to work over there, and to work hard - none of this knocking off at 3pm to go pick up the kids rubbish
Why spend when you can shoplift? All the best people are doing it.
https://www.nzherald.co.nz/nz/police-data-reveals-2024-retail-crime-spi…
Clothing retail here on Aucklands K road. Absolute blood bath here, shops closing/lock changes happening. (Some) landlords taking under rent value but some not (Paul Reid’s st Kevin’s arcade)
as mentioned before, more CV’s being handed in store than customers.
lifeline needed NOW Mr Orr!
There are mortgages rolling over for refix every day, it'll take a while for it to filter through to everybody, but the changes start filtering through to some the same week they change.
Particularly at the moment, when about half of all mortgages are fixed for less than 6 months.
See the article: https://www.interest.co.nz/personal-finance/131794/reserve-bank-figures…
Hmmm. I have been 50/50 on whether the loss of demand from job losses / people leaving was going to tip the balance towards an acceleration in the downturn (like mid-2024). I think I am now more like 60/40.
Remember, interest payable on mortgages in August 2024 was $1.93bn for the month (with OCR at 5.5%). Latest figures are for December 2024 - interest payable was $1.94bn! My guess is that February will be $1.88bn. The economy starting contracting with real purpose around May 2023 when interest payable nudged above $1.4bn.
What will RBNZ do? They'll cut hard and let the currency fall because they see the devaluation of the NZD as a necessary evil - a sacrifice we all have to make to tackle our current account deficit. This strategy is already in play - RBNZ have not intervened meaningfully as the currency has fallen despite having reasonable amounts of firepower.
What should RBNZ do? Close. We have now had 20 years of them tanking and resuscitating the economy with housing busts and booms. Seriously, is this a job anyone should be proud of?
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