Retail spending dips 0.5% in September as growth streak ends

Kiwis spent less in the retail industries in September compared to August, arresting a three-month trend of increased spending and halting any momentum for the industry.

Spending in the retail industries decreased by 0.5% ($34 million) in September 2025 compared with the month prior, while spending in the core retail industries decreased by 0.4% ($25m).

The largest category decreases were in motor vehicles (excluding fuel), down 2.6% ($5.2m), and apparel, which was down 1.4% ($4.8m).

Durables also fell, with spending falling 0.8% or $14m.

The consumables category fell by 0.5% (down $15m), with the fuel category also falling by 0.5% (down $2.5m).

The only category within the month to report spending growth was hospitality, which recorded a rise of 1.5% (up $22m).

The non-retail (excluding services) category remained unchanged month-on-month.

That category includes medical and other healthcare, travel and tour arrangement, postal and courier delivery, and other non-retail industries.

Spending in the services category, which includes repair and maintenance, and personal care, funeral, and other personal services, was down by 1% or $4.0m.

The total value of electronic card spending, including the two non-retail categories (services and other non-retail), decreased from August 2025 by 0.4% or $34m.

In actual terms, cardholders made 168 million transactions across all industries in September 2025, with an average value of $54 per transaction.

The total amount spent using electronic cards was $9.1 billion.

September quarter

Stats NZ also reported the data for the September quarter compared to the June quarter, which showed a positive three-month trend.

Spending in the retail industries increased by 0.6% or $128m over the quarter and spending in the core retail industries increased by 0.7% or $136m.

Almost every category recorded spending growth over the quarter, with motor vehicles (excluding fuel) recording the largest increase, up 2.7% or $16m.

Hospitality spending rose by 1.4% (up $62m) over the quarter, consumables spending grew by 1% (up $81m), and apparel was up 0.4% (up $3.7m).

The categories with the only spending contraction over the quarter were fuel, down 1% or $14m, and durables, down 0.4% or $20m.

The non-retail (excluding services) category was up by 1.5% or $101m and the services category was also up 1.5% or $18m.

The total value of electronic card spending, including the two non-retail categories (services and other non-retail) increased by 0.7% (up $209m) compared with the June 2025 quarter.

Household spending focused on essentials

Kiwibank senior economist Mary Jo Vergara said the result was emblematic of a cautious consumer.

“Clearly the essential goods are taking up most of the budget. There’s been not a lot left over before more fun things, with spending just on grocery goods and services,” Vergara said.

“Looking at the September quarter data compared to last year, durables are down 0.9% compared to last year while consumables were up 3.6%. So you can see how households are splitting their budgets.”

Kiwibank’s own Household Spending Tracker showed spending up by 5.6% over the September quarter compared to last year. However, the volume of transactions fell 5.2%.

Spending on utilities jumped by 19.3% year-on-year according to Kiwibank, underscoring the squeeze from rising energy and council costs.

“Today’s data gives us an insight on how that recovery we’re expecting is likely further into the December quarter, albeit it’s not a good start.”

“I’d say though that the conditions this time compared to last year are much better for recovery. Interest rates compared to last year have fallen quite significantly, and households have really shortened up their books. I think this is the time when people start to lock in the longer rates and then they can start spending elsewhere.”

Meanwhile, Westpac senior economist Satish Ranchhod said that looking at the longer-term trend, the picture is one of subdued growth rather than decline.

Westpac had predicted retail spending levels to rise by 0.3%.

“The result is more surprising as increasing numbers of borrowers have been rolling on to lower mortgage rates over the past few months. But even with that additional money in their pockets, households aren’t rushing to the checkout yet,” Ranchhod said.

“Looking ahead to the Christmas shopping season, we’ll be watching to see if the current softness in spending gives way to stronger demand.”

Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.