In the view of Satish Ranchhod, Senior Economist at Westpac, “retail spending fell 0.6% in October, a weaker result than we had expected. Today’s result follows strong gains in the past two months. Spending levels remain well up on those seen through the first half of the year.”

Key Quotes:

“Households wallets and purses snapped closed in October, with retail spending levels down 0.6% over the month. That was weaker than we or analysts more generally had expected.

Looking back over the past year, retail spending levels are 1.6% higher than they were this time last year.

October’s pullback in spending was seen in a number of categories including consumables like groceries, durable household items like furnishings, and apparel. That saw core (ex-fuel and motor vehicle spending) dropping by 0.6% over the month.

But before we get too downbeat about today’s result, we should put it in context. October’s pullback follows solid gains over the past two months. And even with this latest moderation, retail spending levels are still running well above the levels that prevailed through the first half of this year.

We expect that spending growth will continue to climb through the remainder of 2019 and into 2020, supported by the firming in the housing market and wage growth. However, today’s result indicates that the pace of such increases may still be moderate.

Today’s result likely comes too late to affect the RBNZ’s deliberations ahead of Wednesday’s Official Cash Rate decision.”