Data for the December quarter shows retail purchases up 4.4 per cent to high of $21.8 billion.

Spending on travel and home improvement has helped lift retail sales to a record high, with optimism growing among retailers.

The latest retail sales data from Statistics New Zealand showed total retail sales for the December 2015 quarter were up $921 million or 4.4 per cent from the previous year to a record $21.8 billion.

Spending on accommodation for the period rose 4.8 per cent, and hardware, building and garden supplies spend rose 5.3 per cent - the largest sector increase. The rise in this area coincides with a lift in the building sector and an increase in the number of building consents issued in December.

"Combined with strong population growth and low interest rates, low prices have provided a significant boost to spending," said Westpac senior economist Satish Ranchhod.


"This has been reinforced by a strong tourist season which has given spending in areas such as accommodation a boost.

"These factors are expected to continue providing some support for spending over 2016, though over the coming year the strength of spending will be challenged by the deterioration in the global economy and weakness in export prices."

Twelve of the 15 retail industries had higher sales volumes in the latest quarter compared with the September quarter. Pharmaceutical goods, recreational goods and motor vehicles and parts all declined.

The latest data comes off the back of a survey into the issues facing retail in Australasia conducted by Massey University in collaboration with Monash University (Melbourne) and Retail NZ.

Results from the 263 retailers surveyed over the past two months found that 60 to 89 per cent of their retail revenue came from stores, rather than online.

Lead researcher Associate Professor Jonathan Elms said although online sales were growing strongly, operating good stores was more important to most retailers, as it also provided a customer experience that online sellers could not offer.

The survey also found that business activities had increased in the past three months with retailers, particularly larger ones, appearing to be more optimistic about future market changes.

Greg Harford, general manager public affairs at Retail NZ, said it was heartening to see that most retailers were feeling positive about the coming year.