Farmers flush, households stretched as summer spending divides the economy
Saturday, 21 February 2026
Shoppers spent more over summer, but went shopping less often, which Kiwibank economist Sabrina Delgado says is a sign household budgets remain under pressure.
And behind a large part of the spending increase is a “familiar culprit” - higher prices.
On Friday, the Auckland Business Chamber released new survey data showing 65% of businesses expect to lift their prices over the next 12 months.
“We typically see spending ramp up into the summer holidays,” Delgado said.
But Kiwibank electronic card data showed this effect was less pronounced this January.
“The silly season kicked off on a good note with the number of transactions in December up 0.4% on last year’s levels, but it seems consumer spending got hit with a bad new year’s hangover in January,” Delgado said.
December saw spending 8.6% higher than in the December 2024, indicating households gave themselves more leeway to celebrate Christmas.
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But January sales were only 3.7% higher than in January 2024, largely reflecting inflation in goods and services — particularly food — rather than stronger consumer demand.
Price rises prompted Labour to lash out on Tuesday, with its finance and economy spokesperson Barbara Edmonds saying: “This Government is failing on the basics. Prices are soaring, unemployment is the highest it’s been in 10 years, and Christopher Luxon is making all the wrong choices.”
Households have been particularly hard-hit by rising utility prices.
“From higher council rates to rising energy bills, elevated utility costs are chewing through household budgets,” Delgado said. “Altogether, total dollars spent on household utilities across December and January was around 36% higher than a year ago.
“Many households are still feeling the squeeze after several years of tight budgets, elevated consumer prices, and expensive credit,” she said.
It was also likely that rainy weather had an impact on households’ desire to be out and about, and indeed, there was a spike in spending on homewares.
Kiwibank’s spending data shows the areas of the economy that are thriving, and those that are struggling.
Many farmers have been enjoying the bumper milk and dairy prices that have been hurting households, and making mince into a “luxury” item, as Labour leader Chris Hipkins termed it in Parliament earlier this week.
That cashflow influx to the rural sector, and the promise of a large capital return from Fonterra from the sale of its Mainland consumer goods business, saw a massive spending jump in December.
“Farmers were in good spirits and opened their wallets in December. There was a 13% lift in the number of transactions on farming supplies compared to last year. But what really stands out is the dollar value surging nearly 64% on the year,” Delgado said.
“It’s likely farmers used the stronger cashflow and improved sentiment as an opportunity to make some bigger, more investment-heavy purchases. The kind of spending that typically gets, and has been, deferred during tougher seasons,” she said.
Restaurant visits rose over summer, but cafés saw a downturn.
Spending on clothing was also down.
There was a decline in flight bookings, though that had partially reversed in the weeks since, however, Delgado said early data for February showed household spending was still soft.
Kiwibank expected that to improve as the economy, and job prospects and stability, lifted as the year went on in the run-up to the general election.
One area that showed improvement was potentially tied to an online trend, with many social media feeds promoting the benefits of going “analogue”, and living in the real world rather than spending so much time on the phone.
Many people were claiming they planned to do more healthy real-world activities like reading actual printed books, crafting and engaging with friends in the flesh.
Delgado said: “The number of transactions at stationery and bookshops climbed almost 5% in December and a whopping 14% in January compared with a year earlier. And even more striking, the total dollars spent jumped an average of 18% across the two months.
“The timing of the lift in spend across stationery and books does align with the usual seasonal spikes that come with the Christmas and New Year rush. After all, there are presents to wrap, cards to send, and kids to get kitted out for the return to school.”
But, she said: “This year’s lift was noticeably stronger than last year’s. And in terms of dollars spent, it even appears to have ever so slightly improved and reversed the gradual downward trend we’d been seeing in spending at stationery and bookstores over the past couple of years.”