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New Zealand’s retail spending levels were down 0.1 percent in July. That follows flat spending in June. That was a weaker result than we and analysts more generally had expected.
Some of July’s softness in overall spending was likely due to increases in petrol prices. Those price increases have syphoned funds out of households’ wallets limiting spending in other areas. In fact, excluding fuel and vehicle related spending, spending in ‘core’ categories was down 0.5 percent this month.
July’s softness in spending was seen across a number of categories. That includes ongoing softness in spending on household durable items like furnishings, likely reflecting the weakness in the housing market. Spending on apparel also remains subdued.
Looking at longer-term trends, spending in core (ex-fuel) categories has been flat since the start of this year. That highlights the dampening impact the weak housing market and low confidence have had on spending appetites. This is also consistent with our expectation for soft economic activity through mid-2019, according to the latest report from Westpac Research.
