Card spending drops $640 million in February as New Zealanders stay home

Thursday, 10 March 2022

Card spending dropped more than 7 per cent in February, figures from Stats NZ show.

Credit and debit card spending decreased by $640 million last month as consumers hunker down amid the Omicron outbreak.

It was a 7.6 per cent drop in spending compared to January 2022, Stats NZ figures showed.

“This drop across the board was the first of its kind since August 2021, when the country was in lockdown at alert level 4,” business performance manager Ricky Ho said.

The total amount spent on consumables in February, which includes groceries and liquor, decreased by $141 million (5.7 per cent) from the previous month.

Apart from consumables, the downturn was particularly driven by card spending on apparel, which includes clothing, shoes, jewellery, and watches, down $50 million (14.4 per cent), and on fuel, down $35 million (5.9 per cent).

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“The decrease in fuel spending coincided with more people working from home due to the spread of Omicron and isolation rules being in place,” Ho said.

“In addition, rising fuel prices may have influenced people’s decisions on whether or not to use their cars.”

And while Kiwis spent $5.4 billion in retail using electronic cards, up $58m (1.1 per cent) from February 2021, spending on hospitality, which includes accommodation and restaurants, saw a drop of $97m (10 per cent).

“With the spread of Omicron in the community, people may have avoided travelling or eating out,” Ho said.

ASB senior economist Mark Smith said further volatility was ahead, with retail spending likely to fall further in March as the Omicron wave peaked.

“A post-Omicron lift is expected, but this is unlikely to be as pronounced as in previous episodes. With Covid-19 having been on the scene for more than two years, the consumer looks to be less resilient, with fatigue setting in.

“It is our expectation the retail outlook in general will be challenging over 2022 as headwinds facing the retail sector intensify.”

They included higher retail prices, sharply rising debt servicing costs for households, retail stock shortages, tight credit conditions, a cooling housing market outlook and ongoing Covid-19 caution, he said.