Stats NZ figures show that total card spending rose by 0.9% in August, reversing a drop of the same magnitude in July. However, spending on consumable and durable goods was down

Overall spending on cards rose by 0.9% ($82 million) last month on a seasonally-adjusted basis, according to new figures from Stats NZ.

That exactly reverses a fall of the same magnitude in July and follows card spending having fallen in two of the previous three months.

Once again though, petrol was a significant contributor and in August this was because of rising prices. This saw the seasonally-adjusted spend on fuel up some $69 million (13.5%) on the previous month.

Elsewhere spending in August probably enjoyed some lift from the country's co-hosting of the FIFA Women's World Cup in July and August, with separate visitor figures from Stats NZ for July showing a strong lift in visitor numbers.

Spending on retail industries was up 0.7% in August, while 'core' retail spending, excluding fuel and vehicles, was up 0.6%.

It is notable that spending on consumables and durables both fell in the month, by -0.1% and -0.7% - perhaps indicating the amount of belt tightening now starting to occur.

By spending category, the movements were:

• fuel, up $69 million (13.5%)
• apparel, up $8.4 million (2.5%)
• motor vehicles (excluding fuel), up $4.5 million (2.2%)
• consumables, down $3.1 million (-0.1%)
• durables, down $12 million (-0.7%)

The non-retail (excluding services) category increased by $23 million (1.1%) from July 2023. This category includes medical and other health care, travel and tour arrangement, postal and courier delivery, and other non-retail industries.

The services category was up $12 million (3.5%). This category includes repair and maintenance, and personal care, funeral, and other personal services.

Stats NZ says due to the effect of Covid-19 on tourism, it unable to release seasonally adjusted figures for the hospitality industry. "As such, we are focusing on the actual hospitality values for this release. We will continue to monitor this approach as more data becomes available."

Spending in the hospitality industry increased 5.1% ($59 million) between August 2022 and August 2023.

In actual terms, cardholders made 164 million transactions across all industries in August 2023, with an average value of $55 per transaction. The total amount spent using electronic cards was $9.0 billion.

All of the figures in the card transaction data are value rather than volume-based figures and therefore don't adjust for inflation, which of course was running at 6% annually as of the June 2023 quarter.

Westpac senior economist Satish Ranchhod said while spending levels were holding up, "that masks softer conditions in the household sector".

"In part the resilience in spending is due to strong population growth - per-capita spending growth is much softer. In addition, with consumer prices continuing to rise rapidly, much of the increase in spending levels reflects higher costs, rather than households taking home more goods."

ASB senior economist Kim Mundy said it is clearly a tough economic environment for many households at the moment, "and with inflation proving slow to decline and interest rate cuts still a future prospect, that’s unlikely to change any time soon".

She said that on a per-capita basis, she expects the current household consumption recession to continue.

"However, the population is growing thanks to strong net migration and that will help to put a floor under aggregate consumer spending.

"To the extent that strong net migration supports house prices, there could also be an additional boost to spending via the housing market channel," she said.

Nevertheless, the "soggy" undertone to consumer spending will remain a relief to the Reserve Bank as it tries to bring inflation back to target.

"The fact that there is unlikely to be a strong turnaround in consumer spending any time soon is consistent with our view that the current 5.5% OCR [Official Cash Rate] is likely the peak. But inflation is high and, as a result, OCR cuts are unlikely to be entertained until well into 2024."