Stats NZ says retail card spending rose 0.3% on a seasonally adjusted basis in February after taking a dip in January

Retail spending rose slightly in February - but there's no convincing sign yet that consumers are opening their wallets with confidence.

Statistics NZ says retail electronic card spending lifted 0.3% in February. This was after retail spending had dipped 1.6% in January and risen strongly in December.

Core retail spending, which excludes petrol and vehicles rose 0.5%.

The total value of electronic card spending, including the two non-retail categories (services and other non-retail) was unchanged from January 2025.

As interest rates fall it has been hoped this would prompt some increased spending after consumers had largely put their wallets away last year.

However, while consumer confidence is rising according to surveys, this is not yet translating consistently into increased spending.

While the seasonally adjusted figures showed a rise between January and February for retail spending, compared with February 2024 the actual retail spending figures were down 4.2% and that's the heftiest month-on-month drop recorded since September 2024. Total spending, including all categories and non-retail, was down 2.6%.

The seasonally-adjusted figures for February 2025 showed the following changes compared with the previous month:

• consumables, up $16 million (0.6%)
• apparel, up $3.4 million (1.0%)
• fuel, unchanged
• motor vehicles (excluding fuel), down $0.5 million (0.3%)
• durables, down $1.1 million (0.1%)
• hospitality, down $1.2 million (0.1%).

In actual terms, cardholders made 156 million transactions across all industries in February 2025, with an average value of $55 per transaction. The total amount spent using electronic cards was $8.6 billion. 

While the average value per transaction in February 2025 was the same as in February 2024, the number of transactions was down, from 161 million - and so therefore the amount spent was down as well (from $8.8 billion in February 2024).

Carolyn Young, chief executive of the retail industry body Retail NZ, noted the decline in sales and transactions compared with February of last year "in a still struggling economy" and said retailers hope the Government’s new focus on growing tourism will provide positive benefits for the struggling sector.

"International tourism traditionally hits its peak in February. We know that tourist arrivals are only at about 80% of pre-pandemic levels. In particular, the cruise sector is down 20-25% on last season, which accounts for some of the decline," she said.

"That means thousands fewer feet on our streets. Brick and mortar retailers rely on foot traffic to generate sales so the lower tourism numbers are definitely being felt. Any boost in tourism from here would be welcome relief to retailers."

She also said growing unemployment is affecting shopping habits and contributing to retailers’ challenges.

"Consumer confidence is critical to support an increase in discretionary spending and having confidence in your job security is a factor that is currently impacting consumer buying decisions."

Westpac senior economist Satish Ranchhod said looking at the longer-term trend, "we are seeing some encouraging signs".

He said spending has been trending higher for about half a year now.

"While the rise in spending to date has been gradual, it’s still an encouraging sign for the year ahead. 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." 

Ranchhod said, however, that around half of all 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. As those lower borrowing costs ripple through the economy, we expect to see spending picking up over the coming months."

He added a note of caution, however, about events offshore.

"The increasingly rocky global backdrop could dent confidence. It could also affect financial conditions in New Zealand, and that could be important for spending appetites."