Retail spending rose 1.4% on a seasonally-adjusted basis in September, Stats NZ says.
Spending rose across "a majority" of retail industries, with the largest contribution coming from consumables, up $20 million (0.8%). Consumables include items such as groceries (supermarkets) and liquor.
"People continued to spend more on items such as food and liquor. This is the third consecutive monthly increase for consumables," Stats NZ's business performance manager Ricky Ho said.
"We’ve seen food prices going up in the past few months, which can impact card spending on groceries."
By spending category, the movements were:
- consumables, up $20 million (0.8%)
- apparel, up $15 million (4.3%)
- fuel, up $12 million (2.0%)
- motor vehicles (excluding fuel), down $2 million (0.9%)
- durables, down $10 million (0.6%).
Stats NZ is due to release Food Price Index figures for September on Thursday (October 13). The August figures showed annual food price inflation hitting a 13 year high of 8.3%.
This will be one of the last significant (along with rental information) pieces of economic data to be released ahead of the Consumers Price Index (inflation) figures set for release on Tuesday, October 18.
All eyes will then be on whether annual inflation reduces from its 30-year high of 7.3% as of the June quarter.
The 1.4% rise in spending in September was more than the 0.4% that Westpac senior economist Satish Ranchhod had picked.
He said much of this month’s gain was again related to an increase in spending on hospitality.
"Spending in the hospitality sector has been boosted by the reopening of the borders and the return of international visitors, including a flurry of visitors from Australia in recent months. Spending in the hospitality sector is now back around the levels that we saw prior to the pandemic."
He said looking at the September quarter as a whole, spending in core (ex-fuel) categories is up about 2.5%.
"Over that same period, we estimate that consumer prices rose by around 1.6%. That still points to solid growth in the volume of goods sold. That’s despite the continued interest rate hikes from the [Reserve Bank] RBNZ over the past year and the related cooling in the housing market."
Ranchhod said the RBNZ has been raising interest rates for close to a year now to dampen demand and domestic inflation pressures.
"However, to date, we’ve actually seen relatively few signs that demand is softening to the extent that the RBNZ needs to see."
Now that the borders are open and international tourist dollars are flowing back in, overall demand in the economy is proving to be resilient in the face of interest rate hikes, Ranchhod said.
"And that means the RBNZ still needs to do more to dampen inflation pressures. Consistent with that, we recently revised up our forecast for the Official Cash Rate and now expect it to peak at 4.5%, with 50bp hikes in both November and February. "
19 Comments
I suspect a good portion of this uptick in spending can be attributed to foreign tourists and migrants.
The net flow of people into NZ (customs data) turned positive in Aug for the first time in the entire calendar year and this net figure doubled in September.
Migration and tourism to bailing out our faltering economy, just like old times!
In tough economic times, some people are more likely to relieve stress by turning to unhealthy activities such as smoking, drinking, gambling or emotional eating.
It also causes short term thinking, satisfying the now.
Expect the trend to continue. Buy shares in booze and kfc.
Spending is proving resilient, so there is no excuse for the RBNZ on not focusing on preventing inflation from running away, and thus raising the OCR to a peak of 5% (and keeping it at that level for a significant amount of time). The NZ dollar recent and deep depreciation must also be considered. In the long term, significantly tighter monetary conditions are going to be good for the structural soundness of the NZ economy, which would include a significant rebalance away from parasitic housing speculation into productive activities of the real economy.
"away from parasitic housing speculation into productive activities of the real economy"
we can only hope but how many times have various committees, think tanks and so on reported this to successive govts?
With each party knee deep in ppty specuvesting I remain pessimistic. If Mt Luxon wants to make a statement and stand out from the rest of the crowd....sell up and release his property to our fhb's.
Otherwise my pessimism remains
You mean as a business owner, I could invest money into doing more stuff at a lower cost
Doesn't hiring cheaper migrant workers and exploiting them count as doing more at lower cost? Jokes aside, we know how bad the productivity situation is when the media celebrates an uptick in popularity of websites and online sales among businesses in the year 2020.
NZTech and other expert groups have said our businesses can achieve higher productivity by simply adopting technologies already out there.
Inflation is not being pushed by consumers, instead it has been caused by raising costs in global transportation and fossil fuels, and more lately increased profit margins, it made no sense to punish consumers with mortgages (note I am not too concerned about investors) and increase the OCR to current levels even less to go even further. People are actually consuming less already.
Inflation is not being pushed by consumers, instead it has been caused by raising costs in global transportation and fossil fuels, and more lately increased profit margins, it made no sense to punish consumers with mortgages (note I am not too concerned about investors) and increase the OCR to current levels even less to go even further. People are actually consuming less already.
This is little more that a big 'reckon'. You're only partially describing what inflation is -- the price level of goods and services + money supply growth + asset price growth.
I agree people are probably consuming less.
This may be the best possible time to buy those big ticket items at a discount during these sales.
Even smaller things, like toasters, kettles and vacuum cleaners may never be this cheap for us to buy, ever again.
There is a whole wave of trends that point towards higher prices for these things in the future... Chinese covid lockdowns... Falling NZ dollar... Global price inflation... geopolitical instability...
Not sure how to interpret this data. Like Nielsen data, we see both category volume and value share. Because of the impact of inflation, it's hard to understand if people are spending more or less. I suspect the latter. F'more, comments like the following are not validated IMO:
Spending in the hospitality sector is now back around the levels that we saw prior to the pandemic.
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