Rate Cut Is Early Christmas Present For Retailers

Today’s cut in the Official Cash Rate – and the potential for another cut at the November review – is being welcomed by the retail sector, with hopes that it will boost consumer confidence ahead of the peak Christmas shopping season.

“Today’s cut to 2.5% will help put more cash into consumers’ pockets and we hope it will give them the confidence to enjoy some discretionary spending,” Retail NZ Chief Executive Carolyn Young says.

The Worldline NZ data for consumer spending in September, released on Monday, showed a small increase, off a low base, of 1.1% on September 2024.

“Although consumer confidence remains fragile amid persistent inflation in essentials like food, electricity and insurance, retailers are starting to see some light at the end of the tunnel,” Ms Young says.

The latest NZIER Quarterly Survey of Business Opinion, released yesterday, found that retailers were the most optimistic sector surveyed in the September quarter, despite continued weakness in new orders and sales.

“As NZIER noted, more than 40% of mortgages are due for repricing over the coming six months. On average, this is expected to put an extra $350-$400 per month in consumers’ pockets,” Ms Young says.

“We hope today’s OCR cut will continue to support a recovery in retail demand. This will help give retailers confidence to buy stock and retain staff in the run up to the end of the year.”

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