According to Stats NZ, retail sales volumes rose 0.9% in the December quarter compared to the prior quarter and climbed 4.4% from a year earlier.
“Spending on discretionary items helped drive an overall increase in retail activity,” economic indicators spokesperson Michelle Feyen said.
“Pharmaceutical and other store-based retailing, electrical and electronic goods, and hardware, building, and garden supplies saw the largest increases in activity this quarter.”
This marked the fifth consecutive quarterly increase, though it was softer than the September quarter. Core retail spending—excluding fuel and automotive—rose 1.5%, the strongest growth in over two years.
Economists welcomed the figures, viewing them as evidence that lower interest rates are boosting consumer spending and supporting economic recovery.
“Retail sales volumes are still 5.1% below their peak in mid-2021. And merchants continue to report profitability challenges. But today’s figures are compelling evidence that genuine improvement is occurring,” BNZ economist Matt Brunt said.
Even so, Brunt said BNZ is slightly raising its end-2025 growth forecast to 0.6%.
Infometrics economist Rob Heyes observed that spending growth was evident across more regions and a broader array of store types.
“But with an increasing number of homeowners rolling onto lower fixed mortgage rates, the benefits of the recovery are being felt in spending growth across most regions.”
The South Island saw the strongest regional growth at 2.3% for the quarter, outpacing the North Island’s 1.5%; the largest quarterly jumps occurred in Hawke’s Bay, followed by Canterbury and Otago.
For ASB economist Yen Nguyen, the retail rebound will persist throughout the year.
Nguyen said the retail sector’s recovery is projected to progress steadily, “with a more pronounced improvement anticipated in the second half of the year, driven by lower borrowing costs and a broadening economic recovery.”