Fuel drop skews card figures

Statistics New Zealand estimates that electronic card transactions account for 69 per cent of retail sales. Photo / NZME.

Lower petrol prices contributed to a 0.1 per cent fall in the amount consumers charged to electronic cards last month.

Card transactions in the core retail sector, which excludes petrol stations and car yards, were up a seasonally adjusted 0.3 per cent last month (to $3.8 billion) but the increase was offset by a 4.9 per cent drop in spending on automotive fuels.

ASB chief economist Nick Tuffley said petrol prices had fallen 3.8 per cent over the month and were likely to be even lower on average over December.

"But weaker fuel prices do leave more discretionary income available to spend, so a sustained and substantial drop in fuel prices is likely to give spending in other categories a boost over time," Tuffley said.

Together with ongoing jobs growth and strong net immigration, that would support spending growth into 2015. Tuffley expects the Reserve Bank to keep interest rates on hold until December next year.

Statistics New Zealand estimates that electronic card transactions now account for 69 per cent of retail sales.

Spending on consumables, such as food, rose 0.5 per cent to be 4.3 per cent up on November last year.

Durables, like consumer electronics and furniture, were down 1 per cent but that followed an outsized 2.2 per cent rise in October. Compared with November last year durables were up 1.6 per cent.

Spending on apparel continues to be soft, down 1.4 per cent for the month and down 5.2 per cent for the year.

"This may in part be a function of a slow start to settled warm weather, but the sector is also facing structural challenges through greater online sales competition," Tuffley said.

But the hospitality sector rose 2.3 per cent last month, making 12.1 per cent for the year.

Overall retail spending charged to electronic cards last month was up 3.3 per cent on November last year, only half the annual growth recorded a year ago. But the increase, for the most part, is real as inflation in the sector is weak. The September quarter's retail trade survey reported that prices in nine of the 15 retail industries were lower than a year ago and indeed lower than four years ago.

Westpac economist Felix Delbruck said the combination of low inflation but decent volume growth was likely to become more pronounced over the coming year.

"Thanks to low inflation the Reserve Bank is firmly on hold for the time being and mortgage rates have fallen accordingly. There are already early signs that this is resulting in a lift in housing market activity, which tends to be supportive of consumer spending."

Infometrics economist Mieke Welvaert said even those moderate increases in consumer spending were not entirely supported by a lift in household incomes.

"Over the past six months 45 per cent of total card spending was made on credit cards and the total of outstanding balances climbed at around 6 per cent per annum.

"Neither of these results has been seen since early 2009 and they indicate that this spending growth is not only supported by higher incomes, but also by increasing household debt."

Plastic cash

• Card transactions in core retail sector, which excludes petrol stations and car yards, up a seasonally adjusted 0.3%.
• But the increase was offset by a 4.9% drop in spending on automotive fuels.
• Electronic card transactions now estimated to account for 69% of retail sales.