(Bloomberg) -- New Zealand retail sales volumes contracted for the eighth straight quarter as high interest rates and the surging cost of living curb household spending.

Sales volumes fell 1.9% in the fourth quarter of last year from the third, Statistics New Zealand said Friday in Wellington. Core sales, which exclude fuel outlets and car yards, dropped 1.7%.

The decline household spending comes even as the population grows amid record immigration and adds to signs of weak economic growth at the end of 2023. That may have tipped the nation into a recession after gross domestic product contracted in the three months through September. 

Cooling demand will be welcomed by the Reserve Bank, which has said it has more to do to bring inflation back to its 1-3% target.

Central bank policymakers meet on Feb. 28 and are tipped to keep the Official Cash Rate at 5.5% but signal they won’t be easing policy anytime soon.

Retail spending began slowing in early 2022 as the RBNZ was in the early stages of a tightening cycle in response to surging inflation. Higher borrowing costs rippled through the housing market, pushing down values and further adding to pressure on households’ net wealth. 

At the same time, supply chain issues and soaring global commodity prices pushed the cost of fuel and basic items higher, prompting consumers to cut back on non-essential spending.

Today’s report showed reduced purchases at hardware, building and garden supplies stores as well as of furniture, floor coverings and electrical goods. Accommodation spending also declined despite the onset of the summer tourist season.

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