Inflation drives consumer spending hits record high in March

Wednesday, 5 April 2023

Consumer spending is up, but it is likely to be due to high inflation.

People hit the shops in March causing a record spike in retail spending for the month of March, but it’s not as all as it seems.

Worldline data for last month show consumer spending in March on Worldline NZ’s electronic payments network of $3.14 billion, up 8.3% on March last year and up a record 19.2% on the same month in 2019.

Worldline NZ chief sales officer, Bruce Proffit, said while March was noteworthy for its relative ”normality” following the storms that affected the country in January and February, it did not provide the full picture for the rise in consumer spending.

March had the highest level of growth in spending, 19.2%, since 2019, before Covid, surpassing the 17.3% growth in September 2022.

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“Ongoing increases in spending from one year in the past would usually be considered normal, as growth in income and prices feed through the retail sector, but this has not been so lately,” Proffit said.

“Events such as Covid-19 and the more recent storms have disrupted spending patterns repeatedly over the last 3 to 4 years.”

While an uninterrupted March provided to many merchants there were still many signs of a challenging retail market, he said.

The growth since 2019 was barely above the inflation rate since the March 2019 quarter and, now the ”big-ticket” sectors were experiencing a noticeable decline in card spending on an annual basis.

Hardware, furniture and appliances stores all reported higher spending in March than in March 2019, but spending at these retailers was down on March 2022, Proffit said.

Hospitality was also showing promising returns to pre-Covid spending patterns, albeit the four-year growth rate was even further below the inflation rate.

“However, the 7.8% growth since March 2019 occurred on the second-busiest month of the year for the sector. More compelling evidence of improving times for hospitality merchants is the 45% growth since March 2022.”

Proffit said the mixed spending patterns were reflected in the regions.

Auckland and Northland had a new high in post-2019 growth rates for core retail (excluding hospitality) at 15.5%, but this was below the rate of inflation rate.

The 4-year growth rate was even lower in Wellington and Otago.

The regional figures showed annual core retail (excluding Hospitality) spending growth was highest, in percentage terms, in Otago (17.3%), West Coast (14.6%) and Marlborough (14.1%). Annual spending growth was lowest in Wellington (4.4%).