Retail sales continue to drop as cost-of-living pressures still bite

Retail spending continues to drop according to StatsNZ, down for the eighth consecutive quarter. Photo / Alex Burton

Retail has continued to see declining sales in the last three months according to the latest StatsNZ Retail Trade Survey out today.

Seasonally adjusted retail sales dropped 1.2% in the June quarter compared with the March quarter, amounting to $24 billion.

This is the eighth consecutive quarter to see a drop, reflecting the still-present cost-of-living pressures on customers.

Eleven of the 15 industries had lower sales in June compared with March in the quarter.

Sales in motor vehicles and parts and food and beverage services were down, with electronics down the most at 6%.

Supermarkets, pharmaceuticals and “other” store-based retailing were the exceptions, with sales up 2.1% and 3.2% respectively.

Regional sales saw drops across the board, with 14 of the 16 regions seeing a decline, StatsNZ said.

As for sales per person, it fell 1.5% in the June quarter, the 10th consecutive quarterly decline after seasonal and inflation adjustments.

StatsNZ business financial statistics manager Ricky Ho said retail sales volumes had continued to decline over the past two and a half years.

“The last time we saw several quarters of consistent falls was between 2007 and 2009, which coincided with the global financial crisis,” Ho said.

ANZ chief economist Sharon Zollner expected the retail sector’s weakness to persist over 2024, despite the recent cut to the official cash rate.

“That’s likely to take some time, given the labour market is expected to continue to weaken well into 2025, weighing on consumer confidence, which remains very low,” Zollner said.

“Next quarter’s data will be the first to show the impacts of tax cuts, though the government spending cuts to fund them are likely to provide some offset.”

ASB chief economist Nick Tuffley said deteriorating labour market conditions were expected to be the main handbrake on household spending.

“Weaker household spending is the prerequisite to delivering sub 3% CPI inflation on a sustained basis,” Tuffley said.

“However, if conditions in the household sector turn out to be weaker than expected and inflation follows suit, we could see a faster pace of OCR cuts and a sub 3% OCR in the next year or two.”

Tom Raynel is a junior business reporter who covers the small business and retail sectors.