Boozy February sees rise in alcohol sales

Kiwis spent a little extra on alcohol in January. Photo/Getty Images.

While Kiwis moderated their spending last month, sales in alcohol increased 1 per cent from January.

Overall, increased purchases of groceries, liquor, fuel and hospitality offset reduced spending on big-ticket items.

Growth in spending on apparel, for example, slowed to 0.9 per cent in February from January's 3.3 per cent increase and spending on durables, such as appliances and furniture, fell 0.2 percent after surging 4.9 per cent in January.

"Sales of durables, such as furniture, hardware and appliances, as well as clothes and shoes, appear to have levelled out in February after a more volatile patch in December and January," says Stats NZ retail manager Sue Chapman.

Total retail spending on credit and debit cards grew 0.9 percent in February from January and was down from the 1.8 percent increase reported for January, according to Stats NZ data.

Core retail spending, excluding fuel and vehicle spending, was also up 0.9 per cent in February after a 2.2 per cent increase in January.

Economists say the figures are stronger than they expected.

"This firm result reflects a return to trend for retail spending after some sharp swings in recent months," says Westpac economist Satish Ranchhod.

"It reinforces our expectations for a rebound in economic growth in early 2019," Ranchhod says.

However, Mark Smith, an economist at ASB Bank, detects some underlying sluggishness. "We are attributing the surprise to the impact of the hot and dry summer which looks to have boosted consumable and hospitality retail," he says.

"However, the underlying pace of growth for both retail and core card spending remained sluggish. The outlook for the retail sector remains finely balanced and we expect to see some volatile readings for the monthly figures as retail headwinds and tailwinds collide," Smith says.

Low wage growth and the becalmed housing market "may prompt consumers to closely look at their spending plans this year" but lower interest rates, the tight labour market and the government's families' package "remain powerful tailwinds."

Spending rose in five of the six retail industries. Purchases of durable goods, such as whiteware and furniture, were the exception and fell by 0.2 per cent after a 4.9 per cent jump in January.

Spending on fuel was up 1.3 per cent and spending in cafes, restaurants and bars was up 0.7 per cent.

"The rise in fuel spending coincided with a gradual increase in fuel prices after a period of lower fuel prices," says Stats NZ retail manager Sue Chapman.

"Sales of durables, such as furniture, hardware and appliances, as well as clothes and shoes, appear to have levelled out in February after a more volatile patch in December and January," Chapman says.

Apparel sales rose 0.9 per cent in the latest month, down from an increase of 3.3 per cent in January.

Non-retail spending using cards, such as for travel, health and wholesaling, fell 0.8 per cent in February.

Actual retail spending using cards was $5.1 billion in February, up 3.4 per cent, or $168 million, from February 2018.

Card spending is shifting away from the use of debit cards to greater use of credit cards.

Debit card use in February accounted for 45.5 per cent of total transactions, down from 46.8 per cent in February last year.

Reserve Bank figures released last month showed New Zealanders had $7.484 billion outstanding on credit cards in January, up 5 per cent from a year earlier.