New Zealanders increased their spending on credit and debit cards for a second month in March, led by an increase in consumables such as food and liquor, suggesting low interest rates, cheaper petrol and rising home values are loosening household wallets.
The value of core retail spending, which strips out spending on fuel and vehicle related items, rose 0.8 percent last month, for a 6.1 percent year-on-year gain, Statistics New Zealand said. Total retail spending also climbed 0.8 percent in March, led by a 0.8 percent gain in consumables, a 0.6 percent increase for durables and a 4.5 percent rise in vehicles.
The spending data comes after a range of indicators that point to a buoyant mood for Kiwis, including increased confidence about jobs in particular and a broader gain in consumer confidence in the first quarter, based on the Westpac McDermott Miller Consumer Confidence Index.
"The latest cards transactions data indicate that household spending has accelerated to start 2015," said Nathan Penny, an economist at ASB. "On-going employment growth and strong net migration inflows will continue to support spending growth this year. Also, lower fuel prices and interest rates will boost household disposable incomes as well as the housing market, further underpinning spending growth."
Penny said rural areas are the exception because the decline in the price of milk "will constrain incomes and spending."
In actual terms, card-holders made 125 million transactions across all industries in March, with an average value of $50. The total amount spent across all transactions was $6.3 billion.
The total value of electronic card spending, including services and other non-retail industries, rose 1.3 percent in the latest month, following a 0.4 percent gain in February.