Consumer spending through Paymark’s payments network fell 1.3% in September to $3.572 billion, driven by higher fuel costs, climbing interest rates, and severe weather as households head into the pre-Christmas shopping season.
Paymark’s chief sales officer, Bruce Proffit, noted that the country is experiencing a slower start to the usual end-of-year surge as the pre-Christmas shopping season approaches.
Fuel Price Surges, Rate Hikes and Stormy Weekends Pinch Shoppers
Households absorbed three economic and environmental knocks over the course of September. Retail spending at fuel outlets surged in tandem with rising pump prices.
Petrol prices jumped sharply in mid-September. Spending through Paymark at fuel outlets was running 35% ahead of year ago levels in the week ending 30 September, largely due to higher prices but also due to more transactions.
Bruce Proffit, chief sales officer at Paymark
Financing costs increased over the prior three months as the Official Cash Rate (OCR) climbed 50 basis points (bps), moving from 2.25% to 2.75%. Mother Nature compounded those financial pressures during the final days of the month.
And thirdly, in the last weekend of the month, the weather turned cold, wet and windy across much of the country, which tends to keep shoppers at home.
Bruce Proffit, chief sales officer at Paymark
Non-Food Spending Falls as Regional Growth Varies
Proffit pointed out that year-on-year spending at non-food retailers changed between July and September.
In the first seven days of July, non-food spending went from being +0.9% above year ago levels to being -7.
Bruce Proffit, chief sales officer at Paymark
Geographically, core retail spending growth varied across regions. Gisborne and Hawke’s Bay posted the highest annual growth rates at +3.1% and +2.8% respectively. Conversely, Marlborough suffered a 9.7% annual drop in spending, while the West Coast saw a 3.3% decline. In Auckland, core retail merchant spending fell 1.7% compared to the previous year, following a 2.2% drop in August.
ANZ Economists Weigh In on Consumer Caution and Economic Recovery
Meanwhile, the housing market is gradually losing steam, monetary stimulus is being withdrawn, the unemployment rate remains elevated, cost-of-living pressures continue to bite, and consumers are feeling cautious.
ANZ economists
Economists believe the economic recovery continues.
We think the conditions are in place for the recovery to continue. However, for many households it is unlikely to feel like much of a recovery.
ANZ economists
The consumer confidence index sits 17 points higher than its April low point.