10 Feb 2023

Retail sales using cards up 2.6% as appetite for big ticket buys remains

6:44 pm on 10 February 2023
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Retail spending perked up last month as consumers chased appliances and other big ticket items, but the increase reflected rising prices as much as a renewed appetite for spending.

Stats NZ figures showed retail sales using electronic cards rose a seasonally adjusted 2.6 percent on December, when it fell by more than 2 percent.

The gains were driven by a lift in spending on durables, clothing, and hospitality, while there was a small fall in food and drink spending.

Excluding volatile fuel and automotive spending, retail spending was up 3.6 percent, and overall sales were 2.7 percent ahead of the same month last year.

"Household spending appetites are holding firm. Despite the growing pressures on their finances, households have not been winding back their spending," Westpac senior economist Satish Ranchhod said.

He said a change in consumer habits seemed apparent with a sizeable part of the stronger spending going on travel, and growth in spending over the past year was just over half the rate of inflation of 7.2 percent.

"In other words, we're not reining in our spending, but we're getting fewer goods for each dollar we spend."

A more complete picture of consumer spending will arrive in fourth quarter retail data at the end of the month.

Ranchhod expected a decline in spending as the year went on in the face of continued rate rises, which would start to bite for more households.

"To date, many households have been insulated from the rise in interest costs due to mortgage rate fixing. However, over the coming year around half of all mortgages will come up for refixing, and many borrowers will face refixing at substantially higher rates."

"That signals a starkly different environment for retail spending over 2023."