Coffee, eating out and home renos get the chop as people tighten spending

Wednesday, 16 March 2022

John would meet with his new friend once a week for coffee and a chat. (File photo)

Cafe coffees, eating out and home renovations are being ditched as Kiwis look to tighten their spending.

Independent economist Tony Alexander’s monthly consumer spending survey found 13 per cent of the more than 1200 respondents reported they intend on cutting their spending over the next three to six months.

Independent economist Tony Alexander said eating out is being avoided by most people.

“Eating out is being avoided by most people along with spending more on clothing, footwear, new technology and furniture,” Alexander said.

Spending money on home renovations was also sharply lower, he said.

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The consumers price index (CPI) increased 5.9 per cent from the December 2020 quarter to the December 2021 quarter, Stats NZ figures showed.

ASB economists have warned the CPI could go as high as 7.5 per cent in the June quarter.

Sharon Zollner, chief economist for ANZ, says the Reserve Bank needs some people to lose their jobs to curb inflation.

In January, Alexander compiled a survey on how to handle the cost of living, with 450 responding.

In terms of cutting back on expenses, the most popular suggestion was to stop buying cafe coffees alongside reducing eating out and entertaining at home.

Ditching supermarket vegetables and growing your own was frequently suggested, as well as reviewing all expenses and subscription services, electricity, and insurance in particular.

Others also suggested cancelling credit cards and avoiding buy now pay later schemes.

ANZ chief economist Sharon Zollner said people wanting to save money often cut out socialising spending.

That included dining and drinking out, and going to the movies or shows.

At the other end of the expenditure scale, renovations, new cars, boats, ebikes, spas and furniture were often ditched because they were not a necessity.

Beauty treatments such as hairdressing and even orthodontic treatment were put on the back burner.

Retail NZ chief executive Greg Harford said shopping fulfilled a customer need of some sort, but when times were tough, customers tend to reprioritise their spending on things that were most important to them.

“Often they will trade down brands and look for a cheaper product that fulfils the same function. For example, a home brand product rather than a global brand,” he said.