Another tough month for retail: Spending dips in July

Consumers look to be tightening their purse strings as the cost of living continues to bite.

Retail spending across all retail categories dropped by 0.8 per cent in July. This figure excludes spending in the hospitality industry.

Figures released today by Worldline NZ today show July was another tough month for merchants, but some sectors are showing signs of growth.

Rising interest rates, higher food and fuel prices, coupled with wet winter weather, are the likely factors behind this drop, according to Worldline.

Its data, which accounts for approximately 70 per cent of all digital transactions across the country, shows spending at pet shops, bookshops and chemists and non-retailers such as beauty and hairdressing, veterinary services and dry-cleaners either remained or moved above spending levels recorded in July last year, and pre-Covid levels.

Spending at core retailers was below levels recorded in July last year in Auckland/Northland, down 0.9 per cent, Wellington, down 1.9 per cent, and down 5 per cent in Gisborne and 4.3 per cent in Marlborough.

Spending in Taranaki increased the most of any region last month, by 3 per cent, followed by 2.2 per cent in the Waikato.

In all regions, spending in July remained above pre-Covid levels.

Worldline NZ head of data George Putnam said it was not known what could be attributed to the increases in spending, but it was "certainly encouraging to see these bright spots amidst what has been another tough month for Kiwi merchants".

"While having five Sundays in July this year had a dampening effect on annual growth along with the widespread wet weather, spending was mostly flat or negative amongst many merchant groups," Putnam said.

Spending in July improved – but was still below pre-Covid levels – for hotels and motels and footwear merchants, as well as non-retail merchants such as taxis, flight booking companies and movie theatres.

"These patterns are consistent with a gradual return to more socialising," said Putnam.

Spending at food and fuel retailers increased in July. Photo / Getty Images

"Elsewhere, there is still a rising value of spending (relative to 12 months earlier) amongst merchants selling fuel or food, such as convenience stores and takeaway merchants, but not restaurants and cafés, where increased spending is likely due to higher prices."

Putnam said overall spending in July over the school holidays was likely to have disappointed merchants, particularly those based in the Otago region following a positive start to the month as Australian tourists returned during their school holidays.