Christmas cheer to cost $900 each

It is enough to give Reserve Bank Governor Allan Bollard a bad case of indigestion: New Zealanders are expected to spend $900 a head on shopping this Christmas.

Mr Bollard has sent strict warnings that if spending is not curbed, New Zealand will be up the proverbial creek. The latest survey on what we will buy for Christmas shows that while there may be no paddle, there will be plenty of nibbles and drinks to live off.

The research by Galaxy Research and commissioned by MasterCard International surveyed 477 adults about how much they would spend for Christmas and on what. Food and drink has overtaken clothes and shoes as the most popular category of spending since last year's survey.

Almost one-third said they would spend more on food and drink, and 24 per cent said they would spend more on clothes and shoes. Spending on toys was also indicated: 23 per cent said they would spend more, especially parents of pre-schoolers. Seventeen per cent said they would spend more on big-ticket items, such as computer equipment, stereos, televisions, and appliances.

The survey found the average New Zealander would spend more than $900. Those with families expected to spend more than single people, going to about $1050.

Full-time workers were the biggest spenders - they expected to spend $1100 - twice as much as the unemployed or retirees.

One in five surveyed expected to spend more on Christmas this year, and a similar number said they would spend less.

With petrol prices up as much as 12 per cent on last year and basic groceries up, Christmas was not going to be a cheap exercise anyway.

BNZ chief economist Tony Alexander said more employment, higher wages and good property prices indicated a good spend-up was in order but it was tempered by hikes in interest rates and repeated warnings from Dr Bollard.

He said a One News Colmar Brunton poll this week showed 51 per cent - a 23 point jump on the previous poll - were pessimistic about the economy.

"Until this week I would have said retail sales would be strong. But the poll is the worst on economic confidence since May 1998 when we were in recession. That poll is the first indication of how Bollard's comments have been received."

He said it could hurt sales, especially if Dr Bollard increased interest rates again on December 8, as expected.

Last December was weaker than normal for retail sales. NZ Retailers' Association chief executive John Albertson said he expected spending to be up 5 per cent to 6 per cent from last year.

"It is a little bit softer than last year, but at the moment the trends are for growth to continue in the short term and soften in the early part of next year. There is no reason to expect Christmas will be hampered [by the interest rate rises] to any great extent."

He said a "positive attitude" encouraged people to spend more - the All Blacks winning was always good news for retailers.

Last year, eftpos firm Paymark said consumers spent $3.2 billion in December, up 9.66 per cent from December 2003. Of this, $170 million was spent on Christmas Eve and $190 million in Boxing Day sales.

FESTIVE SPEND-UP

* Overall: $2.7 billion
* On average: $900 each
* Parents: $1150
* Full-time worker: $1100
* Retired: $550
* More than $1 billion will be put on credit cards.
* 1.7 million adults use credit cards.
* One-third intend to spend more on food and drink than they did last year.
* 24 per cent will spend more on clothes and shoes.
* 23 per cent will spend more on toys, especially for pre-schoolers.
* 17 per cent plan to spend more on home entertainment, electronics and home and garden.