Rising living costs and uncertainty about the impact of an increase in GST are being blamed for a contraction in retail spending.
Retail figures from Statistics New Zealand show spending fell by 0.4% in July.
The Retailers Association says sales reflect household caution, as basic living costs continue to rise.
It says consumers have stopped using credit and are cautious ahead of the rise in GST to 15% on 1 October. That's expected to affect prices across the board.
Baycorp says households are stretched. The debt agency expects defaults on power bills to rise by 10% - 15%.
It says the average unpaid bill is $615 - about $100 more than a year ago. Power prices are up by a third over the past five years.
