Retail sales volumes in the June quarter fell at their fastest pace since the global financial crisis, economists said.
For the June quarter, total seasonally adjusted retail sales volume was $26 billion, down 2.3% from the March quarter, according to the latest retail survey from Stats NZ.
Retail sales of motor vehicles and parts fell 5.8%, electrical and electronic products 6.1%, supermarkets and groceries 2.9%, hardware, building and gardening supplies by 5.3%, while food services fell by 3.3%.
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Infometrics economist Brad Olsen said the substantial drop was considerably worse than expected. The market was expecting a 1.7% increase.
Retail sales volumes in the June quarter were decidedly weak and “significantly worse” than expectations, he said.
“The total value of sales remained stable during the quarter, which means that when adjusted for inflation, Kiwis are paying more to get less at the store,” he said.
Falling core spending volumes bolstered the outlook for a relatively weak economic growth figure for the June quarter.
“However, our current view is that the early stages of a recovery in tourism will counteract other broad economic weaknesses and keep quarterly growth in positive territory,” Olsen said.
“Worryingly, the retail data also reinforces a looming challenge to the economy.”
Economic growth is slowing, in line with what the Reserve Bank wanted to see, he said.
“But retail cost pressures still appear to be accelerating, creating lingering inflation fears that will require continued interest rate hikes even if economic activity is subdued.”
Retail NZ chief executive Greg Harford was “not surprised” by the survey results.
“Our members have reported declines in foot traffic and sales as the economy tightens.
“The ongoing depression in the housing market has made consumers feel less affluent, rising interest rates have meant that many consumers with mortgages have had less money in their pockets, and prices are rising to reflect higher costs.”