What inflation? Kiwis enjoy April spend-up

Despite high inflation, Kiwi’s continued to get back to retail therapy in April with adjusted debit and credit card spending rising by $551 million or 7 per cent in, Stats NZ figures show.

This was a larger increase than seen in the previous month, when spending rose by only 1.7 per cent.

Total actual spending using electronic cards was $8.1 billion, up 2.9 per cent from April 2021.

It was a larger rise than expected, Westpac senior economist Satish Ranchhod said.

“Helping to boost spending appetites through April was the easing in health restrictions, which saw a solid rise in hospitality spending over the Easter, school holidays period.”

The rise in spending was widespread however, with increased spending on groceries (+5 per cent), apparel (+17 per cent) and continued firmness in spending on durables (up 1 per cent).

However, the level of spending was only back to about that seen during the Delta wave, he said.

“That means some of the gains we’ve seen will reflect the impact of price rises rather than an increase in the volume of goods being sold.”

ASB senior economist Mark Smith also warned of headwinds for consumers in coming months.

“Our view remains that, despite the strong April bounce, retail spending is unlikely to show the same vigour in 2022 as it did during a stellar 2021,” he said.

“The cost of living is now soaring, with annual CPI inflation set to remain around 7 per cent over the first half of 2022 and with sharply rising debt servicing costs for households.”

A cooling housing market outlook and the hits to local and global equities over 2022, as well as ongoing Covid-19 caution highlighted the challenges facing the retail sector and wider household spending, he said.

Soft consumer sentiment readings point to a weak consumer spending outlook.

Mark Smith

Easing border restrictions would help the hospitality sector and travelrelated industries, but it could be offset by Kiwis heading overseas to spend.

“Soft consumer sentiment readings point to a weak consumer spending outlook.” The hospitality sector was still down almost 5 per cent compared to a year earlier.

Hospitality industry spending fell by $56 million (4.9 per cent) between April 2021 and April 2022.

Due to Covid-19, StatsNZ could not release seasonally adjusted figures for the hospitality industry.