Our take on the latest Retail trade survey (Thu 23 May 2024)
Core sales volumes up 0.4% from Dec qtr (seas adj)
Core sales values up 1.0% from Dec qtr (seas adj)
Accommodation sales volumes up 4.1% from Dec qtr (seas adj)
The key numbers...
- Core retail sales volumes, which exclude motor vehicle and fuel retailing, rose 0.4% from the December 2023 quarter (seasonally adjusted). Despite this increase, sales volumes were still 1.7% lower than a year ago and 7.2% below their mid-2021 peak, reflecting continued declines in activity throughout much of 2022 and 2023.
- After particularly weak results in the December 2023 quarter, there were sizable positive contributions in sales volumes for the March quarter from food and beverage services (up 2.2%), recreational goods (4.7%), accommodation (4.1%), clothing, footwear, and personal accessories (2.4%), and supermarket and grocery stores (0.6%, all figures seasonally adjusted). However, of these storetypes, only accommodation and supermarkets recorded higher sales volumes than a year ago.
- Spending at hardware, building, and garden supplies retailers and department stores continues to come under considerable pressure, with sales volumes down 9.5% and 6.4% from a year ago respectively.
- The value of core sales was up 1.0% from the December 2023 quarter, while annual growth in the retail deflator (an indicator of retail inflation) eased to 3.3%, its slowest rate since 2021.
Retail values up modestly
Retail sales, core measure, seasonally adjusted, $m
...and our reaction
- Retail activity has ticked up slightly after trending downward since 2021/22. Today’s result suggests that the 1.6% slump in sales volumes in the December 2023 quarter was not the beginning of a new steepening in retail declines.
- Nevertheless, we are hesitant to read too much into this latest data, given the continued pressures on household budgets from high mortgage rates and increasing unemployment. September 2023 showed a similar lift in sales, only for activity to subsequently worsen again.
- It is possible that changes in quarterly sales volumes are being skewed by a shift in the seasonal tourism pattern, which has not completely returned to its pre-COVID norm. This latest rebound might reflect improved tourism activity, rather than an improvement in Kiwis’ willingness to spend at the shops.
- As core retail sales volumes now mirror the levels we witnessed in September 2021, the budgetary pressures Kiwis are feeling when buying essential items remain unsustainable for many households.
- There is little other budgetary relief for households on the horizon. The Reserve Bank yesterday continued to push against hopes of an interest rate cut before the end of this year, with the Monetary Policy Committee discussing a rate increase as a live option.
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