Total spending was down 1.9% from April, Stats NZ data shows
Total card spending (including non-retail and services) has slumped by 1.9% ($174 million) in May on a seasonally adjusted basis, with falls across all sectors relative to April, except for services, the latest Stats NZ data showed.
Retail electronic card spending dropped by a seasonally adjusted 1.7% ($113m) month-on-month, while spending in core retail industries (which excludes fuel and vehicle spending) contracted by 1.2% ($69m) over the month.
By spending category, only services posted an increase, up 0.4% ($1.4m) month-on-month in May. This category includes repair and maintenance, and personal care, funeral, and other personal services.
Meanwhile, spending on motor vehicles (excluding fuel) was down 0.1% ($0.2m), consumables dropped 0.3% ($6.8m), apparel slipped 3.7% ($13m), durables dipped 0.8% ($13m), and fuel decreased 4.5% ($25m).
The non-retail category, which excludes services and includes medical and other healthcare, travel and tour arrangement, postal and courier delivery, and other non-retail industries, contracted by 2.4% ($51m) from April, Stats NZ data showed.
Kim Mundy (pictured above), ASB chief economist, said the high inflation environment suggested that the cutback in spending over the month was even more pronounced than the figures, which were measured as values, suggested.
“We don’t expect the current headwinds – a weak housing market, high living costs, high inflation, and low consumer confidence will evaporate any time soon,” Mundy said. “As a result, consumer spending is likely to remain soggy over the second half of 2023.”
The ASB economist there are some bright spots, though.
“High levels of net migration are tailwind for consumption and the housing market and will support aggregate spending, even if per-capita levels continue to decline,” Mundy said. “Overall, slowing consumer spending is consistent with our view that the current 5.5% OCR is likely to be the peak. But with inflation still well above the RBNZ’s 1%-3% inflation target, and upside risks lurking, talk of OCR cuts is premature.”
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