Major bank says latest retail figures are 'soft as a kitten' after consumer spending plummets

Consumer spending has dropped dramatically in the latest retail sales statistics. 

Spending volumes dropped by 1.9 percent on the last quarter of 2023, adding up to a  4.1 percent drop for the calendar year, according to Stats NZ. 

It's the 8th consecutive quarter that sales have contracted.

In an economic note, ASB described the drop in spending with one word - "thud". 

"Falls in retail were widespread, with the 2023 contraction in retail activity particularly severe given extremely strong net immigration."

ANZ Bank said retail trade was "soft as a kitten". 

The big drops were recorded in recreational goods, accommodation, clothing, footwear and accessories. The only industry to grow last quarter was pharmaceuticals.

ANZ said looking ahead it's not clear this downward trend will change significantly over 2024.

The Reserve Bank will release its next decision on the Official Cash Rate ( OCR) on Wednesday, February 28. 

ANZ is still forecasting the need for a hike in the OCR , while ASB says the Reserve Bank will remain watchful and will not cut the OCR until much later this year.