Growth in consumer spending slows

Consumers remain selective, with lots of bargain hunters. Photo / APN

Growth in consumer spending slowed in the first three months of the year.

Statistics New Zealand's retail trade survey recorded a rise of 0.7 per cent in the March quarter seasonally adjusted and after price changes, following a strong 1.4 per cent increase in the last three months of 2013, to be 3.8 per cent higher than a year ago.

Bank of New Zealand economist Craig Ebert said with a surge in net immigration boosting population growth, retail sales were up 0.2 per cent in real per capita terms in the quarter and 2.5 per cent for the year.

ASB economist Daniel Smith questioned the reported 0.8 per cent drop in supermarket sales volumes - much the largest category of spending - compared with a year ago.

"With a net migration gain of 32,000 over the past year we find it difficult to believe New Zealand is consuming less food than a year ago," he said.

Westpac economist Felix Delbruck said that with the housing market slowing, interest rates rising, and surveys suggesting consumers' spending appetites had stayed healthy rather than ravenous, he had expected momentum in retail activity to slow, and it had.

Consumers' willingness to spend more remained selective, with a strong element of bargain-chasing, he said.

Electrical and electronic goods racked up another 5.5 per cent rise to be up 15.7 per cent over the past year, benefiting from the high dollar, and hardware and building supplies sales were up 2 per cent over the quarter and 8.5 per cent over the year.

"Department stores also did pretty well, with sales up 1.2 per cent over the quarter and 6.2 per cent over the year."

In the regional breakdown, Auckland was conspicuously stronger than other parts of the country, with seasonally adjusted sales, in nominal terms, rising 2.8 per cent on the December quarter to be 5.8 per cent up on the same period last year.