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Satish Ranchhod, senior economist at Westpac, notes that New Zealand’s retail spending rose by 1.8% in January, reversing most of last month’s very sharp drop.

Key Quotes

“While January’s pickup in spending was very large, it does need a bit of context. It follows a very large unexpected drop in spending through the Christmas shopping period that was concentrated almost entirely in the durables category.”

“Today’s result, which included a massive 5% rise in durable spending, reaffirms our view that the earlier drop in spending was overstated. While the retail sector has lost some steam over the past year, what we’re looking at is a moderation in growth after strong gains in recent years (rather than a sharp slowdown as had been feared).”

“Looking at spending more generally, households spending was up in most categories in January. That was likely supported by the fall in petrol prices that has put money back in to households’ wallets. Looking at the past year as a whole, core (ex-fuel spending) is up 5.3%.”