Damp start to beginning of year for consumer spending
Wet weather and shoppers tightening their belts ahead of a probable recession have caused consumer spending to drop, new figures show.
Worldline data released yesterday shows spending through core retail merchants in Worldline NZ’s payments network reached $3.04 billion in January, which was down just 0.7% on January 2022, but up 15.9% on January 2019.
Worldline NZ chief sales officer Bruce Proffit said spending was up 1.6% in the first seven days of January compared to a year earlier, but down 0.7% in the last seven days.
‘‘While spending was higher in the first week of January compared to the same week last year, this was not consistent across all regions,’’ he said.
This was down to the stormy weather that occurred at the end of the month, which included Cyclone Hale and then the unprecedented rainfall in the upper North Island.
‘‘But the general nature of the dampened spending also suggests a trend towards wider restraint by consumers,’’ he said.
The cost of living rose 8.2% in the
December quarter, compared with the same period a year before, Stats NZ reported this week.
Annual inflation was also 7.2% in the December quarter, which was unchanged on the inflation rate in the previous quarter.
The direct consumer spending effects of the two major storms in January were most noticeable in Gisborne, Auckland and Northland.
Spending in Gisborne on Wednesday, January 11, was down 16.3% and the decline was apparent for three days, with Tuesday to Thursday spending down 13.5% on 2022 in that region.
Spending in Auckland and Northland on Friday, January 27 ($33.9 million) was down 20.5%, but was back to near or above 2022 levels over the remaining days of the month.
The monthly regional figures show annual spending declines were highest – in percentage terms – in Bay of Plenty (-4.2%), Wairarapa (-3.6%), Gisborne (-3.4%) and Wellington (-3.2%). Spending growth was highest in Otago, up 8.2%, Southland, up 6.9%, and West Coast, up 6.7%.
First Retail Group managing director Chris Wilkinson said inflation had an impact on people’s spending.
‘‘It’s recognised that consumers are shifting priorities from the wants to needs – as food costs, fuel and essentials have risen rapidly while interest rate increases are now beginning to bite, deeply for some.’’
Retailers were noticing these shifts, which had been reflected in the decline in spending on higher-value items such as appliances, electronics, furniture and home improvement, he said.
Retailers were responding with increased emphasis on value lines, smart promotions, such as measurable price drops on selected products, and more competitive purchasing to hold back the scale of price increases.
‘‘This isn’t new territory for the bigger brands and many have been preparing for these challenges – recognising markets do have these cycles that need to be navigated, carefully.’’
‘‘It’s recognised that consumers are shifting priorities from the wants to needs . . .’’
Chris Wilkinson
First Retail Group managing director