Retail spending in New Zealand declined more sharply than anticipated in March, with electronic card transactions down 1.49% from February to $9.08 billion, according to Statistics New Zealand.
The spending dropped 0.8% to $6.47 billion within retail.The result contrasted with Westpac’s forecast of a 0.2% rise, following earlier momentum in the first two months of the year.
Discretionary Spending Takes the Biggest Hit
The decline in retail spending in March was widespread, with discretionary categories feeling the brunt of the drop. Durable goods such as electronics, furniture, and appliances saw the steepest fall, down by 2.5%. Fuel purchases also declined by 2.3%, possibly due to reduced travel demand or easing global oil prices.
Grocery spending was the only category to see an increase, rising by 0.4% month-on-month.
However, Westpac senior economist Satish Ranchhod cautioned that the rise might not indicate higher volumes but rather increased prices, noting that “the past few months have also seen large increases in the prices of many grocery items.”
Recovery Stalls After Early-Year Momentum
The unexpected dip in retail spending in March comes after an optimistic start to the year. “Retail spending in March was much weaker than expected,” remarked Satish Ranchhod, senior economist at Westpac,
“Stepping back and looking at the longer-term trends, the recovery in spending that had been taking shape in recent months looks like it has lost steam.”
While consumer activity remained solid in January and February, March’s data points to a slowdown in post-holiday resilience, as households face rising costs for essentials and reduced demand for discretionary goods.
Mortgage Relief Could Shift the Mood Later in 2025
Borrowing costs, a major concern for consumers, could soon ease, according to Westpac economist Satish Ranchhod. Over the next six months, more than half of all mortgages will be up for refixing, with many borrowers transitioning to lower rates. “This will help to boost spending through the latter part of the year,” Ranchhod noted.
This shift could offer some relief to households struggling with high repayments and may also help rejuvenate sectors such as durable goods and fuel, which were significantly impacted by March’s economic slowdown.
Implications for Retailers and What to Watch Next
The latest spending data signals ongoing pressure for discretionary retailers, with shoppers favouring essentials amid economic uncertainty. While supermarkets may benefit from this shift, overall retail momentum appears fragile.
Whether March’s drop proves short-lived or indicative of a longer trend will become clearer with April and May’s figures.
Easing mortgage rates could help lift spending, but the timeline and impact remain unclear. Persistent inflation in grocery prices adds further complexity, making it harder to separate price-driven gains from genuine consumption.
Conclusion
March’s pullback in retail spending highlights the growing financial strain on New Zealand households. With durable goods and fuel hardest hit, and grocery inflation still climbing, consumer caution appears entrenched. Retailers and policymakers alike will be watching closely to see if forecast mortgage relief can revive confidence and spending in the months ahead.