Batten down the hatches
The mixed spending situation persists. We are outlaying more money in the likes of supermarkets and restaurant/cafes, which is not just the result of higher food and alcohol prices but also due to a greater volume of card transactions. We are spending more on petrol, but that’s a shift in price rather than preference. The spending cuts are coming at outlets selling tyres, carpet, furniture, garden plants and equipment, optometry services, music, books and photos.
Clearly there are many impacts playing out—the housing downturn, the tourism slowdown, the higher food prices, the lower prices of electronics, changes in technology including online retailing, changes in tax rates—but the overall impact is an annual spending growth rate that remains low and is less now than had existed late 2010. Exclude the food and accommodation outlets, and spending on goods through the traditional retailers was down 0.4 percent in March on a year earlier. In other words, we remain in the tight situation that started in 2008 and indicators point to little prospect of any vast improvement near-term.
Possibly a canary in the mine, the busy month of March for travel bookings was still well below the peak of March 2007 with the volume of transactions much the same as last year but expenditure down 1.9 percent.
However money can be found if need be. Outside the core retail sector we are spending more on telecommunications, both on broadband and wider telecommunications services. Maybe a new smartphone is more affordable (and more exciting) than a holiday abroad at present. One thing is certain: tight budgets are forcing choices to be made.
Anthony Byett is an economist who consults to Paymark, New Zealand’s largest Eftpos provider