An unexpected more than 2% slide in April retail card spending was prompted by large falls in grocery and liquor retailing and in fuel retailing.
The weather and Easter's timing may also have had an influence, but nevertheless took economists by surprise.
Statistics New Zealand (SNZ) data for April booked a 2.2% plunge in April, where the market had been expecting zero and the ASB and Westpac respectively declines of 0.2% and 0.1%.
SNZ business performance senior manager Peter Dolan said the decline was driven by the drop in sales of groceries and liquor and an unexpected dip in fuel.
“The fall in retail card spending is unusually large,” he said.
The drop in fuel sales was also unexpected given petrol prices rose by as much as 9 cents a litre in April, he said.
Westpac senior economist Satish Ranchhod said the 2.2% plunge was much weaker than analysts' expectations, for a broadly flat result. The big drop did follow a large gain in March and may also reflect the earlier timing of the Easter holiday.
“Nevertheless, the size of the April fall is surprising,” Ranchhod said.
Following a solid start to the year, some of the spending momentum was fading and over the past four months, spending was “broadly flat,” with the exception of spending on durable household items, Ranchhod said.
Looking further ahead, Ranchhod expected to see the pace of retail spending easing off, in part because the Government's policies would cool housing demand, in turn dampening growth in consumer spending.
ASB senior economist Mark Smith said annual growth in electronic card transactions was at its lowest since the 2007-08 global financial crisis.
“Our expectation is for moderate rates of consumer spending over 2018,” he said.
While average labour income growth started 2018 on a strong note, low wage growth and slowing employment growth would likely become moderating factors, Smith said.
Recent falls in consumer confidence, prospective rises in petrol prices and the flat housing market were also expected to encourage restraint for core spending.
“The (interest driving) official cash rate looks set to remain firmly on hold in this environment,” Smith added.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.