Retail spending dips in March as petrol prices bite

Card spending: Consumers spent less in March new figures show. Photo / NZME

Retail spending by Kiwis fell by 1.3 per cent ($77 million) in March, according to the latest electronic card transaction data from StatsNZ.

That follows a drop of 7.8 per cent drop last month.

One of the key factors been weighing on spending was the high level of petrol prices, said Westpac senior economist Satish Ranchhod.

Prices at the pump hit record levels in March and while the reduction in fuel taxes may have blunted some of the pain, they were still around 10 per cent higher than at the start of the year, he said.

"There have also been sizeable increases in the prices of other items, including food. Mortgage rates have also been pushing higher. Combined, those cost increases are adding to the pressure on households' disposable incomes."

The other factor weighing on spending had been Omicron, he said.

"That's been a particular drag on spending in the hospitality sector, with health concerns prompting many households to avoid entertainment venues and city centres."

Omicron-related nervousness was likely to remain a drag on spending for some time yet, Ranchhod said.

"However, with case numbers trending down, we're starting to hear anecdotes from providers that demand is picking up again. We expect a continued firming over the coming months. Spending in the hospitality space will also receive a boost from the reopening of the borders with Australia."

After spearheading the domestic expansion in 2021, consumers had returned to the side-lines, said ASB senior economist Mark Smith.

However the hit from Omicron had not been as severe as the Delta outbreak last year.

"A post-Omicron lift is expected for retail spending, but this is unlikely to be as pronounced as in previous episodes," he said.

"Easing border restrictions into New Zealand will support the hospitality sector and travel-related domestic retail, but this will also encourage more Kiwis to head and spend overseas rather than buy locally and nest build."

Overall spending - including non-retail sectors - rose 1.6 per cent in March compared to February 2022, Stats NZ said.

Seasonally adjusted card spending on non-retail industries, up 14.5 per cent from the previous month, drove this increase.

Non-retail industries include travel agencies and tour arrangement services, health and pharmaceuticals, wholesaling, and other industries.