New Zealand’s third-quarter spending on credit and debit cards rose at the slowest pace in two years as high interest rates and rising prices weighed on households.
(Bloomberg) — New Zealand’s third-quarter spending on credit and debit cards rose at the slowest pace in two years as high interest rates and rising prices weighed on households.
Electronic card spending advanced just 0.2% from the second quarter, Statistics New Zealand said Friday in Wellington. That’s the weakest since the third quarter of 2021, when the nation’s largest city Auckland was in a Covid-related lockdown and spending plunged 12%.
New Zealand’s central bank has aggressively raised rates to combat inflation, curbing consumer confidence and household spending. A cost-of-living crisis driven by soaring grocery and fuel prices has added to pressure on households and prompted them to be more cautious on purchases.
“We expect household spending will continue to cool as we head into the new year,” said Satish Ranchhod, senior economist at Westpac Banking Corp. in Auckland. “Consumer prices are continuing to rise rapidly. At the same time, increasing numbers of borrowers are rolling on to higher fixed mortgage rates. The combination of those factors will be a powerful brake on household spending.”
Friday’s report showed spending at fuel outlets jumped 8.9% in the third quarter as gasoline prices increased. Excluding fuel and other motor vehicle-related purchases, core retail spending rose 0.6%, which was the slowest pace since early 2022.
Ranchhod said third-quarter spending climbed 4% from a year earlier at a time when the population swelled by 2% and prices rose about 6%. That underscores how household spending power has been eroded, he said.
“Households are splashing out more cash, but taking fewer goods home with them,” he said.
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