In the latest quarter retail prices fell 0.6 per cent. Westpac economist Michael Gordon attributed that to seasonally weak food prices and the legacy of past strength in the New Zealand dollar.
"Subdued inflation has helped to give consumers more bang for their buck in the last few years," he said. "That will change if the recent softening in the New Zealand dollar is sustained." Core retail sales, which exclude car yards and gas stations, rose 1.4 per cent in the quarter and 4.5 per cent over the year in volume terms, and by 0.8 per cent and 4.2 per cent respectively in dollar terms.
The quarter's largest increase was in supermarkets and grocery stores, which recorded a 1.9 per cent jump in sales volumes following four quarters of weak sales.
The past year has seen exceptional population growth including an increase of around 1 per cent from net migration.
In per capita terms nominal sales were up 1.1 per cent in the September quarter and 3.2 per cent for the year.
The largest increase in sales by value over the past year was recorded by the food and beverage services industry -- largely cafes and restaurants -- continuing a steadily rising trend which has seen sales climb 20 per cent over the past four years.
In the latest quarter spending in this category rose 3 per cent in real terms, making 7.5 per cent for the year.
"This is the third consecutive strong quarter for this category and indicates households are willing to spend on discretionary items like eating out," ASB economist Nathan Penny said.
Deutsche Bank chief economist Darren Gibbs expects growth in retail spending to remain reasonably solid in the near term. Last electronic card transactions numbers suggested spending in December quarter had got off to a strong start, he said.
" As we move into 2015 lower incomes in the dairy sector will be a drag. However, we remain conscious that spending growth was relatively restrained during the upswing in commodity prices and so we are less concerned than would otherwise be the case about the scope for spending to weaken substantially."
Read more details of today's retail stats here