Tax changes boost October retail spend

Supermarkets enjoyed a nine per cent growth in sales during October. File photo

Kiwi retailers enjoyed a bumper sales period during October as the Government's package of income tax cuts and GST rise came into effect.

Latest figures from Paymark, which processes about 75 per cent of the country's electronic transactions, put year-on-year growth at 3.3 per cent during October, almost double that of either May, June, July and August last year.

The volume of transactions was also up 4.9 per cent on last year.

Paymark chief executive Simon Tong said the figures showed consumers were not only spending more, but were spending more often.

However it was too early to speculate on whether retailers should take it as a sign that households were starting to loosen their purse strings, he said.

"One month's data is not enough to determine if the increase has come as a result of people having more money in their wallets, or simply because prices have gone up - it would appear to be a bit of both at this stage," he said.

The growth came despite the fact October had five Sundays, which is traditionally the slowest day of the trading week, and a pre-GST sales surge in September, Tong said.

However not all retailers or regions were celebrating last month.

Spending on big ticket items declined during the month, reinforcing the belief that shoppers made the most of the big pre-GST sales.

Furniture retailers reported a six per cent decline in sales while spending in the appliance sector fell 14 per cent, when compared with the same time last year.

The average value of electronic transactions in both sectors fell 14 per cent and 19 per cent respectively.

Sectors that experienced strong growth during October were takeaways (+ 10 per cent), supermarkets (+ 9 per cent), bars and clubs (+ 3 per cent) and footwear, which experienced a significant 8 per cent gain.

By region, South Canterbury, Palmerston North and Waikato fared the best, with growth rates of 8.1 per cent, 7.0 per cent and 5.7 per cent respectively, while spending fell in Marlborough (- 9.2 per cent) and the West Coast (-1.4 per cent).

Figures also show that debit spending (up 6.5 per cent) continues to outgrow credit spending (down 0.3 per cent).

- NZ HERALD ONLINE