"Easing retail fuel prices, the tight labour market, continued government support, increasing wages and higher producer incomes should translate into a reasonable Christmas for retailers, but a nervous couple of months lie ahead," Smith said in a commentary.
ASB does not expect to see any changes to the OCR until 2020.
Third quarter retail volumes were considerably softer than expected, and were more consistent with weaker consumer confidence and the less supportive housing market backdrop.
Smith said increased spending on fuel had dampened activity in the wider retail sector despite the July 1 boost to lower income households from the Government's Families Package.
Stats NZ said hospitality spending went through a lull during the depths of winter and the start of spring, with the volume of spending down 3.3 per cent, while the value of spending shrank 2.4 per cent.
Supermarket and grocery store spending, which accounts for about 20 per cent of the volume of spending, shrank 0.2 per cent by volume and increased 0.3 percent by value in the quarter.
Spending on cars and parts shrank by 2.3 per cent, and was down 1.7 per cent after allowing for price movements.
The volume of fuel purchases rose 0.5 per cent, while rising prices pushed the value of spending on fuel up 7 percent in the quarter.
"The notable increase in the value of fuel sales coincided with the start of the Auckland regional fuel tax and record pump prices," Stats NZ's retail statistics manager Sue Chapman said in a statement.
"However, the rise in fuel sales was offset by falls in the food and beverage and the vehicle industries this quarter."
On an unadjusted basis, the volume of retail sales rose 2.7 per cent in the September quarter from the same period a year earlier, led by a 12 per cent increase in spending on electrical and electronic goods.
The volume of department store sales rose 11 percent, due in part to the inclusion of some sales retailer Warehouse Group used to report within the pharmaceutical and other stores category. That segment's sales were up 1.1 percent.
The volume of spending on fuel fell 1.3 percent from a year earlier.
Including price changes, the actual value of retail sales rose 4 per cent to $22.82 billion in the September quarter from a year earlier, driven by an 18 percent increase in spending on fuel to $2.24 billion.
Spending on motor vehicles and parts fell 1.3 percent to $3.33 billion in the quarter, the only industry to register a decline in value terms. In volume terms, spending on cars and parts was down 0.1 per cent.
The volume of spending at supermarkets and grocery stores rose 1.3 per cent in the quarter from a year earlier, while the value increased 2.3 per cent to $4.93 billion, accounting for about 22 per cent of the value of all sales.
Retail inventories were $8 billion as at September 30, up 5.2 per cent from a year earlier.
-- Additional reporting BusinessDesk
