The way that kiwi consumers are spending has increased in the March 2025 quarter, according to new data from Infometrics.
Core retail sales volumes rose 1.5 percent in March 2025 from the December 2024 quarter (seasonally adjusted). The rise follows a 1.6 percent (revised up from 1.4 percent) jump in the December quarter. March quarter spending volumes were 1.4 percent higher than a year ago, the largest annual increase since June 2023.
Despite back-to-back, significant quarterly rises, core retail sales volumes per capita remain subdued, 11 percent below peak levels in mid-2021.
Growth in spending was widespread, with eight of the 13 core industries seeing a lift in quarterly seasonally adjusted spending volumes. Clothing, footwear and personal accessory retailing rose 4.4 percent, its largest quarterly since September 2022.
Core spending values in March were higher than a year ago across 13 of the 16 regions. Growth in the South Island was 3.8 percent pa, outpacing the 1.0 percent pa growth in the North Island. Regional growth was led by Otago (8.5 percent pa), West Coast (7.9 percent pa), and Nelson (4.5 percent pa), driving the outperformance of the South Island compared to the North.
Matthew Allman from Infometrics said the government’s Budget reiterated much of what Infometrics had signalled in its April forecasts, with the economic recovery to be restricted by weaker growth in our trading partners economies. But substantial back-to-back quarterly rises in core retail sales volumes is a positive start for the economic recovery.
The strong recovery in the South Island has likely been driven by better international tourism arrival numbers benefitting South Island tourism areas, combined with stronger primary sector commodity prices.
Urban areas appear to be recovering a bit slower, in-line with trends across the labour market as falls in employment across professional services, administration, and media hit and restrict spending in the main centres.
The unemployment rate is nearing a turning point, with the rate expected to be peaking in the current June 2025 quarter. As the labour market improves over the second half of 2025, combined with the continuation of households rolling onto lower mortgage rates, there should be more scope for further improvement in discretionary spending, driving retail sales higher.
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