US-Iran war wounds NZ consumer spending

The US-Iran conflict and its consequences for fuel prices have taken a toll on New Zealand's consumer spending, according to recent data from Stats NZ. Retail sales, adjusted for inflation, declined by 0.5 percent to $25.9 billion in the three months leading up to June, marking the first decrease in spending in nearly two years. This dip, however, was more than offset by a 3 percent increase compared to the same period last year.

Economic indicators spokesperson Michelle Feyen explained that the surge in fuel prices, which rose by 20 percent for petrol and nearly 48 percent for diesel, played a significant role in driving up overall spending. When adjusted for price changes, however, retailing of fuel experienced the largest decline in sales volumes among the measured industries.

Of the 15 spending groups tracked, eight witnessed a decline in sales during the quarter. Fuel purchases saw the most substantial drop, with a 13 percent decrease, while sales for vehicles, food and beverage services, accommodation, and recreational goods also fell. Conversely, electronics and electrical goods posted the largest quarterly increase in sales volumes, rising by more than 9 percent, followed by modest growth in pharmaceutical products and online spending.

Notably, the South Island experienced a stronger growth in quarterly spending at 1.5 percent, nearly double the 0.8 percent rise observed in the North Island. Recent surveys have indicated a gradual improvement in consumer spending, though a majority of experts remain skeptical about a swift recovery. Optimists are still in the minority, and consumers appear cautious about making significant purchases.