Press Release – Kiwibank
Kiwibank’s Senior Economist, Mary Jo Vergara, observes a quiet resilience emerging within Kiwi wallets after two years of tightened spending habits. While household expenditure is on the rise, underlying trends suggest a shift in priorities, as families focus on essential purchases.
Household Spending Trends
Kiwibank’s latest Household Spending Tracker indicates that total household spending increased by 5.6% in the September quarter compared to the previous year. However, the number of transactions has decreased by 5.2%, suggesting that Kiwis are paying more for fewer items as essential expenses dominate their budgets. Spending on supermarkets and utilities remains high, while discretionary spending continues to lag. Signs of recovery in housing-related expenditure hint at a gradually returning confidence in the market.
Essentials Dominate Purchases
Spending at supermarkets has surged, with both transaction value and volume reflecting a year-on-year increase. Nevertheless, the money spent has grown at a rate double that of transaction growth, indicating persistent food price inflation. While grocery trips increased by 5%, the average cost of shopping carts jumped by 11.2% this quarter.
“Kiwis are experiencing a ‘paying more for less’ scenario,” Vergara explains. “The average value of a supermarket transaction was up by 5.1%, showcasing the ongoing impact of food inflation.”
Utilities and Household Bills Rising
In conjunction with rising food costs, spending on household utilities increased significantly, soaring by 19.3% and highlighting the financial strain from escalating energy and council expenses. This rise further emphasizes the challenges Kiwis face in maintaining their household budgets.
Food Experiences Remain Popular
Despite financial pressures, some New Zealanders are managing to enjoy small luxuries, with café spending climbing by 5.5% in value. Interestingly, the number of visits rose only modestly by 1.4%, suggesting that while consumers are still indulging, they are doing so more selectively.
In stark contrast, the retail sector is feeling the impact of these economic changes. Spending on clothing and footwear has declined by 4.1%, and the number of transactions in this category dropped even more significantly by 6.1%, despite prevalent discounts.
Signs of Hope in Housing Expenditure
Encouragingly, spending related to housing—including furnishings, electronics, and renovations—has shown renewed vitality and optimism. Expenditure on home contents and furnishings has risen by 3%, while electronics spending increased by 6.9%, and renovations were up by 3.8%. “These early signs could signify that the housing market is beginning to awaken,” Vergara states.
Cautious Optimism Ahead
As households continue to navigate the hurdles of higher expenses and job uncertainty, there is a sense of cautious optimism as we approach the summer months. While budgetary pressures remain, a turning point appears to be on the horizon. Falling interest rates are likely to bolster disposable incomes, enhancing overall spending during the upcoming holiday season, including Black Friday, Christmas, and Boxing Day.
Recent business surveys suggest retailers are feeling optimistic about the festive season, linking lower interest rates with improved purchasing power for homeowners, which could support a spending recovery. Although challenges persist, there is genuine hope that better financial conditions and a cheerful holiday season may lead to a positive shift in economic activity.
Content sourced from scoop.co.nz
Original URL
