Retail spending was weak in January.
Total sales fell 1.1 per cent on December, seasonally adjusted, reflecting an 11 per cent drop in car sales, Statistics New Zealand said.
Motor vehicle sales are 24 per cent lower than their most recent peak in July 2007, returning to June 2001 levels.
Core retail sales, which exclude the automotive sector, were up 0.3 per cent. The increase is entirely explained by a 1.7 per cent rise in supermarket sales, making up 30 per cent of core retail sales. ASB economist Jane Turner said food price inflation accounted for much of the increase. Food prices rose 0.8 per cent in January.
The biggest fall was in appliance sales, which were down 6.6 per cent.
Sales of automotive fuels were 2.6 per cent down on December. Diesel prices fell but petrol prices rose progressively during the month.
Compared with January last year total retail sales were 3.7 per cent lower and core sales 1.8 per cent higher.
Despite falling interest rates and another lot of tax cuts to come in April, economists expect consumers to remain cautious, concentrating on reducing debt or building up precautionary savings.
There should be some support for consumer spending from a pickup in immigration, Bank of New Zealand economist Craig Ebert said.
"However this will also accentuate softness in the labour market."
