Apparel spending followed suit, down $6.9m (2%), with motor vehicles (excluding fuel) down 0.3% ($0.6m).
The only category to report an increase in spending was fuel, up $6.4m (1.3%).
Late last week, the average petrol price for unleaded 91 returned to above $3 a litre, touching $3.06 on Friday, according to fuel tracking app Gaspy.
Carolyn Young, CEO of Retail NZ, said increased tourism could bring a boost for retailers in spring.
Retail NZ chief executive Carolyn Young said Kiwi households remained cautious as fuel costs continue to bite.
“We experienced a uniquely strong July buoyed by a public holiday (Matariki) and the men’s Football World Cup gave a boost to hospitality, while an extra trading weekend and flat petrol prices gave shoppers more opportunity to spend, August represents a return to something more cautious,” Young said.
“While some parts of the economy have been showing positive signs, retail has been variable, with a number of economic pressures meaning consumers are hesitant to routinely make those discretionary purchases many retailers rely on.”
Young suggested the upcoming general election may also have encouraged some households to “wait-and-see”.
However, one industry that will boost the retail sector is tourism.
Yesterday, figures released by Stats NZ showed July overseas visitors finally surpassed pre-Covid visitor levels for a single month.
Young said retailers would be hoping for a spring uptick ahead of the holiday spending season.
“We’re heading into a crucial time of year for our stores, as many rely on strong summer sales to sustain them through quieter months later in the year.”
The non-retail (excluding services) category, which includes medical and other healthcare, travel and tour arrangement, postal and courier delivery, and other non-retail industries, increased by $24m (1%) in August.
The total value of electronic card spending, including the two non-retail categories, decreased from July by $48m (0.5%).
Cardholders made 172 million transactions across all industries in August 2026, with an average value of $55 per transaction.
The total amount spent using electronic cards was $9.4 billion.
Satish Ranchhod, Westpac senior economist, said the soft labour market is weighing on discretionary spending.
Westpac senior economist Satish Ranchhod said the broader story is that there is a lack of momentum in household spending.
“We get a more meaningful picture of household spending if we step back and look at the longer-term trend over the past few years. That perspective highlights the lack of momentum in spending, with spending levels essentially tracking sideways since 2023, despite increases in both the population and consumer prices,” Ranchhod said.
“Under the surface, spending on groceries has been trending higher gradually. However, spending in discretionary areas has been subdued: hospitality spending has essentially been flat, while spending on durables has dropped back over the past few years.”
Looking ahead, Ranchhod said household finances were likely to come under renewed pressure over the next few months, pointing to tensions in the Middle East and mortgage rates pushing higher as examples.
“Spending growth is likely to pick up again next year as the jobs market eventually improves and inflation eases. However, the recovery is likely to remain gradual in the near term.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
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