The decline might have a silver lining, in that savings from petrol prices being 20c per litre lower than a year ago should leave consumers with some spare cash.
The Statistics New Zealand data, released last Friday, showed retail spending fell a seasonally adjusted 0.4% following a 0.2% increase in July.
Actual retail spending rose 3.7%, or by $166million, to $4.7billion in August from the corresponding month last year, with fuel the only one of six industry sectors measured to fall, dropping by 6.1%.
SNZ’s business indicators senior manager Neil Kelly said the lower fuel price meant people were spending less at the pumps.
The decreases in hospitality, down $14million, or 1.5%, and consumables, down $8.1million, or 0.5%, followed increases in spending in recent months, Mr Kelly said.
The hospitality industry includes accommodation, bars, cafes and restaurants, and takeaway retailing while consumables includes grocery and liquor retailing.
Westpac senior economist Satish Ranchhod said declines were seen in nearly all spending categories.
While there was a particularly marked decline in hospitality spending, it followed strong gains during the past two months, which were boosted by elevated tourist numbers.
"It was inevitable that we’d see some softening as tourist numbers eased back to more normal levels," he said in a statement.
He said with lower fuel prices leaving more money in households’ wallets, this boded favourably for spending over the coming months.
Spending was flat on durable items, like furnishings, and had been supported by the ongoing strength in the housing market.
"We’ll be watching to see if this remains the case as new restrictions on housing lending come into effect," Mr Ranchhod said of the Reserve Bank’s loan to value ratio requirement of a 40% deposit for investor homebuyers.
ASB economist Daniel Snowden said it was only the second time retail card spending had fallen into the red in 16 months.
"The weakness was surprisingly broad-based but may be due to the month containing four weekends after five in July," he said in a statement.
"Despite the downbeat results, we expect spending to remain healthy this year due to ongoing tourism growth, low interest rates and migration showing little sign of slowing," Mr Snowden said.
He said tourism had been one of the main areas of spending but slumped 1.5% from July to August, after July’s firm 3.1% result, but one fewer weekend in a month could be partly responsible.
— Additional reporting: BusinessDesk
