Hospitality spending in January fell 0.2% or $2.9m compared with December.
The only core categories with a spending increase were fuel and motor vehicles (likely seasonal), which grew by $0.9m (0.2%) and $5.9m (3.2%) compared with December.
Services, including repair and maintenance, personal care, funeral and other personal services, reported spending growth of 1.8% ($6.8m).
Spending in the non-retail (excluding services) category also increased in January, up by 1.6% ($37m) compared with December.
That category included medical and other healthcare spending, travel and tour arrangements, postal and courier delivery, and other non-retail industries.
The total value of electronic card spending, including the two non-retail categories (services and other non-retail), was up by $600,000, virtually flat compared with December.
In actual terms, card-holders made 166 million transactions across all industries in January 2025, with an average value of $56 per transaction.
The total amount spent using electronic cards was $9.3 billion.
Expected drop
Westpac senior economist Satish Ranchhod said the result was sharper than expected.
“January’s fall followed a very large rise in spending over December, which was in part related to increased spending on durables, like household furnishings. Spending on those sorts of big-ticket items tends to be ‘lumpy’ on a month-to-month basis,” Ranchhod said.
“So it’s not surprising that we saw spending on those same items dropping back again in January, accounting for most of the fall in overall spending levels.”
Despite the decline, Ranchhod said the longer-term trend in spending is looking more positive.
Spending has been trending higher since July, and spending in discretionary areas (like durables, apparel and hospitality) is up more than 3% on last year.
“The financial pressures that households have been wrestling with are easing, with inflation dropping back and interest rates falling.”
Retail NZ chief executive Carolyn Young said slow spending is not helping retailers facing ever-increasing costs.
“While retailers saw some benefit from the customary Christmas rush and the Boxing Day sales, consumers are continuing to be careful with their spending,” Young said.
“Retail NZ members are telling us that their profitability continues to be eroded by big increases in business costs, particularly rates and insurance. Today’s data shows that price increases as a result of inflation and the post-Covid surge in population are not translating into higher incomes for retailers.”
She said retailers would be looking forward to next week’s Official Cash Rate announcement for some relief, expected to be announced on February 19.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
