Card spending falls in December

Photo / Dean Purcell

New Zealanders kept the credit and debit cards firmly in their wallets over Christmas as people cut back on discretionary spending.

Spending on debit and credit cards fell a seasonally adjusted 1.2 per cent during the month, following increases of at least 1 per cent in each of the three preceding months, Statistics New Zealand said.

All industries recorded falls, except for fuel retailing which was up 3.3
per cent, reflecting a 4.5 per cent jump in the cost of petrol during December.

The continued increase in petrol prices in recent months was likely restraining households' discretionary spending, ASB economist Christina Leung said.

"Going forward, we expect a continued recovery in the labour market will support an improvement in consumer confidence. This should underpin a gradual recovery in retail spending over the coming year," she said.

Consumer spending has been in a rut over the past year as households used historically low interest rates to repay debt rather than ramp up spending.

That's kept the pressure on the Reserve Bank to keep rates low as the lack of demand holds back New Zealand's economic recovery.

The value of transactions in the retail industries was down 0.9 per cent in December 2010, following increases in each of the three previous months.

The value of transactions in core retail - which excludes the motor vehicle-related industries - was down 1.6 per cent in December 2010.

This fall was led by the durables and consumables industries, Statistics New Zealand said.

Durables - which includes furniture, hardware, and appliance retailing fell 1.2 per cent in December, and consumables (which includes food and liquor retailing) decreased 0.6 per cent.

Trends for the value of transactions in the total and retail series have continued to increase since early 2009.

The trend for the core retail series has generally been increasing since the series began in October 2002 but has eased in recent months.

Electronic card transaction figures, which cover debit, credit, and charge card transactions with New Zealand-based merchants, include GST.

- NZ HERALD ONLINE / BusinessDesk