11 Mar 2011

Rising cost of basics slows discretionary spending

8:15 am on 11 March 2011

An ASB economist says the fall in retail sales in February shows that discretionary spending is coming under increasing pressure from the likes of higher fuel and food prices.

Statistics New Zealand figures show retail spending using debit, credit and charge cards fell a seasonally-adjusted 0.2% in February.

The fall follows a rise of 2.4% in January, which was the biggest gain in five years.

Excluding fuel and car purchases, spending fell 0.6%, as consumers spent less on furniture, hardware, appliances and clothes.

ASB chief economist Nick Tuffley says rising fuel and food costs have been depressing sales for apparel, furniture and hardware.

He says there appears to be a divide between necessities, such as food and petrol, and discretionary items.