Twelve of the 15 retail industries had higher sales volumes in the December 2025 quarter compared with the September 2025 quarter.<\/p>\n
Importantly, that increase wasn\u2019t just the result of price increases, Westpac senior economist Satish Ranchhod said.<\/p>\n
\u201cThe amount of goods that consumers are actually taking home was up 0.9% in December quarter and is up 4.4% over the past year,\u201d Ranchhod said.<\/p>\n
\u201cThat was above our and market forecasts for a 0.6% rise.\u201d<\/p>\n
This was the fifth quarter in a row that we had seen a solid rise in retail spending, he said.<\/p>\n
That corresponded to the period over which the Reserve Bank (RBNZ) was cutting the Official Cash Rate (OCR).<\/p>\n
Looking under the surface, the increase in spending had been centred on discretionary spending areas, which tended to be more sensitive to interest rates, Ranchhod said.<\/p>\n
\u201cFor instance, spending on electronics, furniture and hardware were all up 2% over the past quarter. We also saw gains in spending on recreational items (+5%) and clothing (+3%).\u201d<\/p>\n
On top of increased spending on goods, spending on hospitality and dining out was also climbing, Ranchhod said, although some of that reflected increased spending by tourists.<\/p>\n
The only areas where spending fell in the December quarter were vehicle sales and grocery spending.<\/p>\n
In the case of groceries, some of that decline may have reflected a shift to dining out.<\/p>\n
The fall in vehicle sales followed a big rise in the previous quarter.<\/p>\n
\u201cWhile the pickup in spending is an encouraging sign for retailers, in some cases consumers are actually purchasing items from low-cost online, offshore retailers,\u201d Ranchhod said.<\/p>\n
\u201cAs a result, many domestic retailers are still facing tough trading conditions. This is a particular issue in sectors like apparel.\u201d<\/p>\n
Broadly, though, the outlook was positive.<\/p>\n
\u201cThe RBNZ has signalled that the easing cycle has come to an end. However, many households are still rolling off earlier, higher fixed mortgage rates and are refixing and lower at ones, in some cases, at rates that are 100 to 200bps lower. That process will continue for several months yet,\u201d Ranchhod said.<\/p>\n
\u201cAnd the related easing in average borrowing costs will help to support spending through 2026.\u201d<\/p>\n
Looking around the country, spending was up in most regions.<\/p>\n
Twelve of the 16 regions had higher retail sales values in the December 2025 quarter compared with the September 2025 quarter, after adjusting for seasonal effects.<\/p>\n
Sales in the South Island increased by 2.3% ($180 million) to $7.9 billion, while sales in the North Island increased by 1.5% ($341m) to $23b.<\/p>\n
\u201cHawke\u2019s Bay and Canterbury regions had the highest percentage increase in retail sales this quarter, relative to the previous quarter,\u201d Feyen said.<\/p>\n
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.<\/p>\n