Retail card spending remained flat in June despite previous expectations of an increase amid an improving economic environment.
The latest electronic card transaction data from Stats NZ shows that actual core retail spending in June was up only 0.4 per cent year-on-year.
The figures remain subdued despite a drop in fuel prices and signs that conflict in the Middle East was starting to ease (then). It follows strong May spending data, where actual core retail spending increased 2.8 per cent year-on-year.
“Retailers will have been hoping to see another rise in spending for June, with the global uncertainty looking like it was easing somewhat,” said Retail NZ CEO Carolyn Young.
“But other than an uptick in grocery spending, with a 2 per cent rise in consumables, shoppers continued to cut back despite those positive economic signs.”
Apparel took another blow, with spending down 4.2 per cent compared to June last year – its fourth straight monthly decrease. “Even hospitality took a 1.4 per cent tumble despite seeing a reasonable lift in spending in May,” she continued.
Young warned that shoppers could cut back on spending further, as global tensions have erupted again over the last week, with the re-closing of the Strait of Hormuz.
She noted that retailers should think carefully before raising prices during such tough times.
“Retailers always absorb costs where they can, as they’re aware the high cost-of-living has been hitting households hard. While they need to ensure they cover their costs, they also need to attract customers to their stores. It’s a tough balance to strike.”
The Reserve Bank has signalled it expects to see economic growth return in the September quarter, which, according to Young, will provide retailers with some comfort.
