Kiwis spent more last month than they did in December 2022. Photo / Brett Phibbs
Kiwis spent more last month than they did in December 2022. Photo / Brett Phibbs
Kiwis shrugged off high inflation, rising mortgage rates and warnings of recession to spend more in January than they did in December.
Retail card spending rose $171 million (2.6 per cent) in January 2023 comparedwith December 2022 when adjusted for seasonal effects, Statistics NZ said today.
But total card spending increased in January 2023 following a fall in December 2022.
The rise in retail spending was led by an $80m (5.1 per cent) increase in the durables category, which includes items such as furniture, hardware and appliances.
”The increase in spending on durables came after decreases in November and December last year,” business performance manager Ricky Ho said.
In fact, the broader “total” measure of card spending (which included retail spending as well as non-store-based purchases) had risen 7 per cent over the past year, he said.
“Digging under the surface, it does look like some shifts in spending appetites are occurring. A good chunk of the recent strength in spending looks like it’s been related to the recovery in travel, with increasing numbers of us now flying abroad for holidays again.”
Spending in the hospitality category rose by $187m (16.6 per cent), compared with the same month last year. The hospitality category includes accommodation and food services.
“The higher spending on hospitality this month reflects fewer Covid-19-related travel restrictions compared with January 2022,” Stats NZ’s Ho said.
“The opening of the border in the middle of last year meant more overseas tourists were able to visit New Zealand.”
Reserve Bank warnings of pending recession looked to have had a fleeting impact, said ASB senior economist Mark Smith.
“Spending staged a solid rebound from its December dip, with retail, core and total card spending hitting record highs as consumers downplay RBNZ warnings over the need for spending restraint,” he said.
Higher consumer prices over the recent period likely boosted nominal spending values, he noted.
Grocery prices and mortgage rates are expected to continue rising in 2023. Photo / Getty Images
“The impact of recent storms in the upper North Island did not seem to show in the January figures, but we are likely to see a boost to services, durable and apparel spending in the coming months as repair work starts and as damaged goods are replaced.”
Looking ahead, spending appetites were likely to fall over the course of this year, Ranchhod said.
“Price rises are continuing to erode our spending power. And the related interest rate rises will become an increasing drag on households’ disposable incomes,” he said.
“To date, many households have been insulated from the rise in interest costs due to mortgage-rate fixing.
“However, over the coming year around half of all mortgages will come up for refixing, and many borrowers will face refixing at substantially higher rates. That signals a starkly different environment for retail spending over 2023.”