Retail sales: Kiwis getting ‘less bang for our buck’ as sales volumes dip

The hospitality sector saw big sales boost in December quarter, NZH File Pic

The total volume of retail sales decreased 4 per cent in the December 2022 quarter compared with the December 2021 quarter, Stats NZ said today.

Westpac senior economist Satish Ranchhod noted that households were “splashing out more cash, but we’re getting less bang for our buck”.

Nominal spending levels rose by 1.7 per cent over the December quarter.

“However, with prices rising rapidly, the actual amount of goods we’ve been purchasing has been going backwards. In fact, the volume of goods sold fell 0.6 per cent in the December quarter,” Ranchhod said.

“And this isn’t just a one-off drop. The actual amount of goods we’re purchasing has been edging downwards for a year now, even as rapid price rises have pushed nominal spending levels higher.”

That data was slightly weaker than economists expected, suggesting the Reserve Bank’s monetary policy tightening was starting to work.

ANZ had pencilled the 0.3 per cent rise (quarter on quarter).

This was the first partial indicator for Q4 GDP, and at face value presented some downside risk, said ANZ senior economist Miles Workman.

But Ranchhod noted that the retail trade data hadn’t been a great indicator of broader activity across the past few quarters.

Lower volumes of retail sales were seen in the hardware, building, and garden supplies industry, down 15 per cent, and in the motor vehicles and parts industry, down 10 per cent, helping to drive a fall in total retail sales compared with the December 2021 quarter.

”Falls in building supplies and vehicle sales in the December 2022 quarter are reflective of a decline from the peak in sales seen during December 2021,” business financial statistics manager Melissa McKenzie said.

Seven of the 15 industries had lower seasonally-adjusted sales volumes in the December 2022 quarter compared with the September 2022 quarter.

With price effects included, the largest industry movements were:

• food and beverage services – up 4.6 per cent ($167 million)
• motor vehicle and parts retailing – up 3.8 per cent ($151 million)
• supermarket and grocery stores – up 2.3 per cent ($142 million)
• electrical and electronic goods retailing – down 11 per cent ($113 million)
• accommodation – up 7.2 per cent ($88 million).

Meanwhile, sales volumes grew in the hospitality sector in the December 2022 quarter, with food and beverage services up 14 per cent, while accommodation services were up 28 per cent compared with the December 2021 quarter.

“With border restrictions lifting, a return of international visitors was likely to have helped boost hospitality spending at the end of 2022,” McKenzie said.

Thirteen of the 16 regions had higher seasonally adjusted sales values in the December 2022 quarter compared with the September 2022 quarter.

By region, the largest movements were:

• Auckland – up 2.3 per cent ($261 million)
• Canterbury – up 1.3 per cent ($50 million)
• Manawatū-Whanganui – up 2.0 per cent ($24 million)
• Wellington – up 0.8 per cent ($21 million)
• Otago – up 1.3 per cent ($20 million).