Spending up, transactions up, but tax rise confuses analysts

Kiwis ate 10 per cent more takeaways last month. Photo / Glenn Jeffrey

Shoppers bumped up spending last month, but how much of that was due to tax changes is not clear.

From October 1 GST rose from 12.5 per cent to 15 per cent while personal taxes fell.

Paymark, which processes 75 per cent of electronic transactions in this country, yesterday said that spending through the Paymark network grew 3.3 per cent in October from a year earlier. That rate was nearly double that compared to the midyear months of May, June, July and August when it rose 1.8 per cent.

The volume of transactions was up 4.9 per cent last month from October 2009.

Paymark chief executive Simon Tong said a rise in the value of transactions had been expected, given the increase in GST.

But the combined volume and value figures indicated not only an increase in spending, but that people were buying more often, 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."

Spending on big-ticket items declined, with furniture and appliance sectors down 6 per cent and 14 per cent respectively, year-on-year, reinforcing the belief that shoppers made the most of pre-GST rise sales, Tong said.

The average value of electronic transactions in those two sectors fell 14 per cent and 19 per cent, respectively, suggesting October was characterised by heavy discounting or smaller purchases of lower-than-average price.

Sectors with strong growth during October were takeaways, which was up 10 per cent, supermarkets up 9 per cent, bars and clubs up 3 per cent, and footwear up 8 per cent.

- NZPA