2 September 2026

Retail NZ, the peak body representing New Zealand’s retail sector, says the Reserve Bank’s decision to raise the Official Cash Rate by 0.25% to 2.75% today is a knock for retailers. 

“It has been a challenging few years for all Kiwis, with high unemployment and the rising cost-of-living continuing to hurt household budgets,” Retail NZ Chief Executive, Carolyn Young, says. “An OCR increase like this will have an immediate impact on our retailers; as New Zealanders are forced to cut back on spending to meet higher mortgage and rent costs.” 

The decision to raise rates comes at a difficult time for retail. Whilst there were signs of things improving for the sector at the end of 2025 and early 2026, the Iran conflict put a hole in the lifeboat and recovery since then has been patchy at best, with many businesses remaining vulnerable.  

This interest rate rise comes in unusual circumstances. Historically, the Reserve Bank would raise rates to cool inflation on a foundation of lower unemployment and higher household spending. Unemployment today is at an 11-year high and consumer demand is weak. All New Zealanders, including businesses and consumers, are feeling the pinch of cost pressures, and having to think hard about every purchase. 

“Retailers have been doing everything possible to absorb costs as best they can, rather than pass them on to hard-pressed consumers. However, a rise in the OCR places further upward pressure on retailers with rising costs of debt” Ms Young says.  

“As a result of the OCR rise, retailers will likely be hit twice as costs go up and spending falls, with homeowners forced to recalibrate their spending to cope with higher mortgage payments.” 

Ms Young says with little to no financial buffer, lower and middle-income earners facing higher mortgage repayments or rent hikes have no choice but to immediately cut back on discretionary retail spend just to cover the basics. 

“With margins already tight, Retail NZ is concerned that the additional pressure from rates rises will jeopardise the fragile recovery for a retail sector already under pressure.”  

Retail NZ will be closely monitoring any positive changes in the economy as a result of this rise. 

For further information or to set up an interview please contact Carolyn Young on 021 449 452

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