Finance and economics continue to remain prevalent themes throughout the industry, and the news of the OCR increasing by 0.25 percent has left business owners on tenterhooks.
Retailers are feeling cautious after the Reserve Bank’s decision to increase the Official Cash Rate (OCR) 0.25 percent to 2.5 percent.
“It has been a challenging time for retailers in recent months, with the tough economic environment and lower consumer spending taking its toll on the sector,” Retail NZ Chief Executive, Carolyn Young, said.
“Today’s decision by the Reserve Bank will make many of our members nervous. Hikes to the OCR can impact confidence and reduce consumer spending as interest rates rise, directly affecting homeowners through higher mortgage rates and other debt.”
During 2024 to 2025, there were nine rate cuts by the Reserve Bank in an effort to stimulate growth and help the economy recover. Changes to the OCR are the only mechanism the Reserve Bank has to manage inflation and stimulate the economy, but rate cuts over that period struggled to make any meaningful impact on spending, and didn’t positively affect business and consumer confidence.
The OCR has been held at 2.25 percent since November 2025 as the country has dealt with some challenging economic conditions, including high unemployment rates and sharp rises in fuel prices.
“Retailers have been feeling the effects of rising overheads in terms of fuel and freight costs, as well as higher power prices during these cold winter months. They know as well as anyone that next week’s inflation number is likely to show a noticeable increase, and that it is in their interests to get inflation back down to the Reserve Bank’s target range,” Young added.
“However, they’ll now be bracing for another tough few months ahead as those business costs remain high, but spending in-store is likely to reduce.”
Along with the upcoming Consumer Price Index, retailers will also be keeping an eye out for Stats NZ’s June Electronic Card Transactions data.
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