Hospitality and apparel hit as households divert cash to petrol
New Zealand retail card spending fell 0.4% in September, following a 0.9% drop in August, as higher fuel prices squeezed household budgets, according to Westpac’s latest analysis of electronic card data.
The result fell well short of Westpac’s forecast of a 0.8% rise. Core spending, which strips out fuel and vehicles, fell 0.7% over the month.
Households cut back on extras
Westpac senior economist Darren Gibbs said the weakness was concentrated in discretionary categories, as rising petrol costs left households with less to spend elsewhere.
Spending on fuel rose 2.9% in September as prices rebounded late in the month. Official figures confirm prices rose sharply over the month. Stats NZ’s selected price indexes for September 2026 show petrol prices rose 6.4% and diesel 7.8% from August, taking annual increases to 24.3% and 55.8% respectively, while food prices were flat for the month.
Grocery spending lifted modestly, but hospitality fell a further 2.3% after a 1.9% decline in August, apparel dropped 2.0% for a second straight month, and spending on durable goods slipped 0.4%.
Over the September quarter as a whole, total retail spending edged up just 0.1%, while core spending rose 0.4%. Gibbs said that, “given higher prices, at face value this points to a weak quarter for volumes”.
Westpac’s own customer card data, released earlier in October, painted a slightly different picture. Per-person spending on its cards rose 1.4% in September, although the bank said higher fuel prices were partly behind the lift.
Rates outlook in focus
For mortgage advisers, the bigger question is what pressure on household budgets means for borrowers and interest rates. Westpac expects spending volumes to stay subdued in the near term, as fuel costs eat into incomes at a time when wage growth remains weak.
That leaves the Reserve Bank (RBNZ) watching closely. Gibbs said: “What happens beyond this year will depend on how the Middle East conflict evolves and how the RBNZ responds to the near-term spike in inflation.”
That matters because inflation is already well above target: annual CPI hit 4.1% in the June 2026 quarter, driven largely by fuel, and September-quarter figures are due on 22 October.
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