New Zealand retailers are entering the final quarter with inflation at 4.1 per cent and consumers directing spending towards essential goods.

Stats NZ’s latest electronic card transaction data for September shows actual core retail spending rose 0.1 per cent compared with the same month last year. Including fuel and vehicles, the increase was 0.9 per cent year on year.

Retail NZ CEO Carolyn Young said fuel spending rose 11.1 per cent, driven by price rises at the pump. This accounted for most of the increase in total retail spending.

“The current fuel prices, along with power, insurance and other essential bills are not only impacting households, they’re also increasing business costs, raising overheads and squeezing retailers’ margins,” Young said.

She also warned that cost-of-living concerns could be compounded by uncertainty ahead of the election, with political polls suggesting the result could go either way.

September data showed spending on food and alcohol, one of two core retail categories to record growth, rose 3 per cent year on year. However, the increase remained below the inflation rate. Spending on durables rose 0.3 per cent.

By comparison, apparel spending fell 5.2 per cent, while hospitality spending declined 4.4 per cent. Young said the figures showed consumers were limiting discretionary purchases.

“The New Zealand apparel industry works hard to provide an amazing range of clothing and footwear for consumers, but it has been an extremely tough couple of years for the sector. We would encourage shoppers to get out and support stores in their local high street this festive season,” Young said.

For the September quarter, actual core retail spending rose 1.2 per cent, largely due to spending in July. Young said retailers would be hoping for higher consumer spending in the Christmas quarter.