Soft Q4 Real Retail Sales, Another Early Sign Of Easing Demand

Retail sales volumes were weaker than expected in Q4 falling 0.6% q/q after an upwardly revised +0.6% in Q3. The annual rate was down 4% but heavily impacted by negative base effects as Q4 2021 rose 9% q/q. There were some Covid trends still working through the data but it could be another early sign that demand is easing, which the RBNZ will welcome. The Q1 data will be impacted by recent natural disasters and the underlying trend will be difficult to ascertain.

• Q4 2022 saw weak sales in the hardware, building and garden supplies sector (-15% y/y), which should see a rebound with rebuilding after flooding, and motor vehicles (-10% y/y). These areas had seen strong sales during Q4 2021.
• With the recovery in international tourism, the hospitality sector is seeing a rebound with food services up 14% y/y and accommodation +28% y/y.