Business performance manager Ricky Ho said: “This is the first time since December 2022 that only one industry saw a rise in spending, and the first time since February this year that total card spending fell.”
Services were the only category where there was a rise in spending, up $1.4m (0.4 per cent) on last month. The category includes repair and maintenance, and personal care, funeral and other personal services.
The non-retail category slumped 2.4 per cent, down $51m on April 2023, with total electronic card spending down 1.9 per cent ($174m) for the same period.
“Today’s weak spending result highlights the growing pressure on households’ finances,” Ranchhod said.
“There were sizeable falls in spending on household durables and hospitality, despite a fall in fuel prices over the month.”
He said the result is “particularly surprising” in light of a recent surge in migration.
Ranchhod said he expects the factors will slow household spending over the months ahead: “Retail prices are continuing to rise at a rapid pace. We’re also seeing increasing numbers of households rolling on to higher mortgage rates.”
ASB senior economist Kim Mundy said the sharp fall in spending was “roughly in line with our expectations”.
“The current economic backdrop is challenging for households and by extension household spending... We don’t expect the current headwinds, a weak housing market, high living costs, high inflation and low consumer confidence, will evaporate any time soon.
“As a result, consumer spending is likely to remain soggy over the second half of 2023.”
Mundy said the slowdown in spending is consistent with ASB’s expectations that view the current 5.5 per cent official cash rate as likely to be the peak: “But with inflation still well above the RBNZ’s 1-3 per cent inflation target, and upside risks lurking, talk of OCR cuts is premature.”
Fuel prices saw the biggest drop, down $25m (4.5 per cent), followed by apparel, down $13m (3.7 per cent).
Spending on durables including whiteware and appliances were down $13m (0.8 per cent) while consumables spending was down $6.8m (0.3 per cent). Motor vehicle spending saw the smallest drop down $0.2m (0.1 per cent).
In actual terms, retail card spending came in at $6.4 billion in May, up 3.3 per cent ($203m) on May 2022.
Cardholders made 163 million transactions across all industries in May 2023 with average transactions at $55 each. The total amount spent using electronic cards was $8.9b.
Spending in the hospitality industry rose 7.6 per cent ($83m) on last May.
