Spending rises for the first time in three months as fuel prices ease
New Zealand retail spending edged higher in June, rising 0.4% per person on a seasonally adjusted basis — the first monthly increase since March, according to Westpac's latest Retail Spending Pulse.
The lift follows easing tensions in the Middle East and a sharp drop in fuel prices, with 91-unleaded down around 30 cents a litre and diesel down nearly 70 cents. That relief flowed through to discretionary spending, with entertainment up 0.7% and clothing up 0.2% over the month.
Travel spending posted the largest gain by far, rising 6% in June as households caught up on delayed trips and, according to hospitality-sector anecdotes cited in the report, increasingly opted for closer or onshore destinations over international travel.
A "nasty cocktail" still weighing on the recovery
Westpac senior economist Satish Ranchhod (pictured) points to a soft labour market, sluggish wage growth, and upward pressure on mortgage rates as the real drag on the recovery, describing the combination as "a nasty cocktail" that means spending should recover "only gradually even if fuel costs continue to fall."
That caution holds despite June's uptick: spending levels remain effectively tracking sideways since February, with fuel still a factor even after recent falls — prices remain well above pre-war levels, leaving daily fuel spending running around 13% above last year despite the volume purchased down roughly 6%. Other essentials are adding to the squeeze too, with utilities spending up 2% and insurance up 3% in June.
That mortgage-rate pressure traces back to the OCR: the RBNZ hands down its next decision on 8 July, with banks split between a hold and a hike — and further apart still on where rates eventually peak, from ASB's 3.25% to Westpac and BNZ's near-4%.
Rural regions outpacing the cities
The recovery is far from even. Spending growth has been strongest in dairying-heavy regions including Southland, Canterbury, and Otago, buoyed by firm export earnings supporting regional incomes and confidence.
Auckland and Wellington, by contrast, have seen spending soften alongside weaker job growth, with the urban-rural divide widening further since the Middle East-driven cost increases took hold.
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