Apparel and grocery spending lead first monthly rise since February
New Zealand retail card spending rose 0.5% in June, marking the first monthly increase since February and offering a modest sign of resilience in household demand.
“Retail spending was stronger than expected in June, with sales up 0.5%. We expect further, albeit gradual, increases through the back part of the year,” said Satish Ranchhod (pictured), Westpac senior economist
Statistics NZ data confirmed a 0.5% rise in seasonally adjusted retail spending and a 0.7% lift in core retail spending (excluding fuel and motor vehicles), driven by higher grocery, apparel, and durable goods sales. Spending on consumables rose $29 million (1%), apparel climbed 3.1% ($10 million), and durables increased 0.6% ($10 million).
“Much of the rise in spending over the past month was related to increased spending on groceries, and in part that will reflect the large price increases for items like butter,” Ranchhod said. “June also saw a fall in petrol prices which would have put money back into households’ pockets.”
Discretionary spending mixed as hospitality lags
While gains were recorded in some discretionary areas, hospitality spending fell 0.3% – the sixth consecutive monthly decline.
“Many operators are reporting tough trading conditions,” Ranchhod said.
Retail NZ also sounded a cautious note, pointing out that June 2025 sales were down 0.4% compared to June 2024, interest.co.nz reported.
“While it’s positive to see the improvement in sales compared to May, the year-on-year data tells a different story,” said Retail NZ CEO Carolyn Young.
Initial results from Retail NZ’s quarterly Retail Radar survey showed that around 60% of retailers did not meet their sales targets for the April–June quarter.
“The retail sector is continuing to battle strong headwinds, with low consumer confidence limiting sales,” Young said. “Consumers are continuing to be careful with their spending, and we have yet to see the boost expected from lower interest rates.”
June rise offsets weak quarter
Despite the June gain, quarterly figures highlight persistent challenges. Stats NZ reported a 0.7% drop in total retail spending for the June quarter and a 0.3% drop in core retail.
Categories such as fuel (-4.7%), hospitality (-1.5%), and durables (-0.7%) all declined over the quarter. Only consumables posted a quarterly rise, up 1.4%.
Mortgage rate cuts could revive momentum
Ranchhod expects further recovery in the second half of 2025, supported by reduced mortgage rates.
“Compared to this time last year, fixed term mortgage rates are around 170 to 200bps lower,” he said. “Over the next six months, around half of all mortgages will come up for refixing, giving many borrowers the chance to secure a much lower rate.
“The related increases in disposable income levels will be a boost for sentiment, and that should support a gradual recovery in spending as we approach the end of the year.”
