August’s electronic card data shows NZ retail spending dropped by over $200 million compared to July

A resurgence in higher fuel prices contributed to retail spending falling by more than $200 million in August.

According to Statistics NZ’s latest electronic card transactions data, consumers spent an extra $6.4 million on fuel during August, bringing August’s total fuel expenditure to $508 million. This follows a $22 million drop in fuel spending in July.

Retail spending fell by 0.9% or $63 million in August from July, turning around the 1.3% gain in retail spending that Stats NZ reported for July.

Core retail card spending, which doesn’t include fuel and motor vehicles, fell 1.0% or $63 million in August. This was a big fall from the 2.2% monthly increase reported in core retail spending in July.

The total amount spent using electronic cards in August was $9.4 billion, $223 million less than what was spent in July. Stats NZ said in actual terms, cardholders made 172 million transactions across all industries during the month, with an average value of $55 per transaction.

By retail spending category, the movements in August were:

• Durables, down 1.6% or $26 million
• Hospitality, down 1.7% or $25 million
• Consumables, down 0.4% or $13 million
• Apparel, down 2.0% or $6.9 million
• Motor vehicles (excluding fuel), down 0.3% or $600,000
• Fuel, up 1.3% or $6.4 million

‘Remaining cautious’

Retail NZ chief executive Carolyn Young says the latest retail spending figures show households are “remaining cautious as fuel costs continue to bite.”

“We experienced a uniquely strong July buoyed by a public holiday (Matariki) and the men’s Football World Cup gave a boost to hospitality, while an extra trading weekend and flat petrol prices gave shoppers more opportunity to spend. August represents a return to something more cautious,” she says.

Alongside the rise in fuel costs, there were several reasons shoppers may have been more reluctant to get out their wallets in August, according to Young. These include the increase to the Official Cash Rate (OCR) in early September, sustained high unemployment and some pre-election uncertainty.

“Whilst some parts of the economy have been showing positive signs, retail has been variable, with a number of economic pressures meaning consumers are hesitant to routinely make those discretionary purchases many retailers rely on. People may also be reining in their spending after letting their hair down during July,” she says.

“Retailers will be hoping a spring uptick and increasing tourist numbers can sustain the sector until the holiday season sales get underway in a couple of months' time. We're heading into a crucial time of year for our stores, as many rely on strong summer sales to sustain them through quieter months later in the year.”

Say cheese

The monthly retail spending data from Stats NZ help paint a picture of Gross Domestic Product (GDP), New Zealand’s official measure of economic growth.

In turn, GDP provides a snapshot of how the country’s economy is performing. NZ’s economy grew by 0.8% in the March quarter. 

The June quarter GDP is due to be released on Thursday, with bank economists anticipating the latest GDP figures to show marginally brighter economic growth than previously expected. 

ANZ NZ and Kiwibank have forecast just a 0.1% increase in June quarter GDP, while Westpac and BNZ are projecting a 0.2% lift. ASB is anticipating the highest level of GDP growth in the June quarter, forecasting a 0.3% increase.

However, the Reserve Bank has projected that June quarter GDP will be flat.