Spending on nice to haves rapidly shutting down

In ASB’s latest Economic Weekly, Mundy says the bank has been slightly surprised by the extent of the pullback and recovery in household expenditure is unlikely to eventuate this year.

Last week’s second quarter NZ Retail Trade Survey left little doubt that Kiwi households are reducing spending.

Total retail volumes fell for the third consecutive quarter and are down 3.5% on one  year ago. Core volumes – which exclude vehicles and fuel sales – contracted 5.1% on year-ago levels.

Consumers are cutting back on the nice-to-haves, such as meals out and home upgrades. “The fact consumers are cutting back is not surprising, as we’ve been warning for some time that this would be a challenging year for consumers and by extension the retail sector,” Mundy says.