Statistics New Zealand acting retail manager Kathy Hicks said the latest 0.7% monthly rise mainly reflected spending on household essentials, such as groceries and fuel, the latter because of higher petrol and diesel prices.
"This lift also coincided with the introduction of the Auckland regional fuel tax, which came into effect on July 1," she said.
Actual retail spending using electronic cards was $5.2 billion in July, up by $222 million, or 4.5% from a year ago.The largest movements were in fuel, up by $14 million or 2.1%, consumables such as grocery and liquor, up by $11 million or 0.6%, and hospitality, up by $5.6 million, or 0.5%.
ASB senior economist Mark Smith said quarterly momentum in card spending remained well below the levels of early-2018.
"After starting 2018 with reasonable momentum, the figures suggest that the pace of spending has shifted down a gear," Mr Smith said in a statement.
He expected spending for the remainder of 2018 to "remain moderate", but noted a continued slowing in household spending could be the catalyst for the the reserve Bank to lower the interest-driving official cash rate (OCR).
Last week the Reserve Bank pushed out its forecast for the length of time the 1.75% OCR would remain untouched by a year to 2020, prompting a huge plunge in the New Zealand dollar.
Mr Smith had expected a "modest boost" to retail spending from lower to middle income families from the government’s $5.5 billion Families Package.
"The boost, to date, however has been modest, with consumers diverting expenditure to fuel spending," he said.
Westpac senior economist Satish Ranchhod said July’s increase in spending followed "very muted growth" in the first half of the year, and was supported by the Government’s Family Package.
For the rest of the year, Mr Ranchhod said he expected spending to be stronger than in the first half of the year, but said households’ spending appetites would continue to be challenged by the ongoing softness in the housing market.
