Kiwis spent more over summer compared to 2024, but the way we spent has continued to shift.
Kiwis spent more over summer compared to 2024, but the way we spent has continued to shift.
Summer spending has grown year-on-year as interest rates and inflationary pressures ease, but according to a new report from Kiwibank, spending patterns are continuing to shift.
Kiwibank’s electronic card data for the December 2024 to January 2025 period shows spending grew by 2.3% compared to the previous year’s average, butthe typical spending spike was more muted.
Despite household budget pressures easing, Kiwibank said Kiwis favoured “cost-conscious socialising and prioritised wellbeing”.
Hospitality spending demonstrates this effect, with cafe spending rising nearly 3% while takeaway purchases increased by 3.4%. Conversely, restaurant and bar spending declined by 2.4% as budget-friendly outings were the preference.
Kiwibank senior economist Mary Jo Vergara said dining spending patterns reflect the ongoing cost of living crisis.
“I think it’s this common thing we’ve seen throughout 2024, where people were really keeping their purse strings tight. We’re moving away from discretionary items and going out fine-dining and moving towards more affordable luxuries or convenience like cafes,” Vergara said.
“They’ve done pretty well in terms of the spending data, but it’s those pockets within the hospitality scene that are on a higher end; those are kind of items that you cull when times are hard.”
Kiwibank senior economist Mary Jo Vergara said various economic pressures should come under control over 2025.
The spending in higher areas is no clearer than in travel, where spending on flight bookings including domestic and international fell by 4%.
Hotel and accommodation spending also reported a significant decline of 15%.
Vergara said the change in travel spending could be a form of course correction following the end of the pandemic, when travel spending surged as international borders opened.
The shift in attitudes is apparent in retail. December card spending was up by 3.5% largely due to Christmas sales, but overall retail spending was down 0.7% for the year compared to 2024.
Part of the drop is attributed to a cultural shift, where the desire for goods is being replaced by experiences such as events, social outings and getaways.
For those in the retail industry, Vergara said the light is still at the end of the tunnel as tailwinds for consumer spending begin to change.
“There are three things. Interest rates falling, consumer price inflation has really fallen as well, and we’re actually seeing wage growth running above consumer price inflation, so real income growth will start to enter.
“House prices were also expected to lift this year, and we know a lot of people have equity tied in with the housing market. But this is more towards the second half of the year.”
Fitness and wellness spending surged, with an 8.3% lift in gym memberships and fitness services as New Year’s resolutions took hold.
Home improvement and renovation spending also rose over December and January, up by 0.9% compared to the 2023/24 summer.
For Vergara, the data points to an inevitable improvement in consumer spending for the year ahead.
“Again, there are so many tailwinds for consumption to lift this year, and it’s going to be interesting to see which sector really kind of outperforms in 2025.”
“But again, I think it’ll be those interest-rate-sensitive sectors like retail, like hospitality ... that will really benefit [as] households [will] have a bit more disposable income now with interest rates falling and house prices hopefully rising this year.”
The latest national data on electronic card spending for January will be released by Stats NZ on February 13.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
