Kiwi credit and debit card spend edges up in December

New Zealanders increased their spending on debit and credit cards in December, with gains in apparel, consumables and hospitality offsetting a drop in spending on durables.

The value of core retail sales on electronic cards, which strips out spending on fuel and vehicle related items, rose 0.1 percent in December from the previous month, to a seasonally adjusted $3.84 billion, following November's 0.3 percent gain, Statistics New Zealand said. Including fuel and vehicle spending, total retail spending dropped 0.1 percent to $4.71 billion, led by a 4.2 percent drop in fuel to a 19-month low of $714 million, following the global slump in oil prices.

Total spending, which includes non-retail industries and services, slipped 0.3 percent in the month to $6.22 billion.

"Although most retail industries were up in December, fuel spending fell significantly," acting business indicators manager Tehseen Islam said. "Like November, the fall in fuel spending coincided with falling fuel prices."

The price of oil began its tumble from its high in the middle of last year, as oversupply led to an oil glut while Middle East producers engaged in a price war to keep their market share. Oil is now trading at a six-year low, and has been blamed as a contributing factor to ongoing low interest rates, as the cheaper petrol prices keep a lid on global inflation.

"With fuel prices likely to be even lower on average over January, this spending category will likely soften further in the near term," Nathan Penny, rural economist for ASB Bank said in a note. "But weaker fuel prices do leave more discretionary income available to spend, so a sustained and substantial drop in fuel prices is likely to give spending in other categories a boost over time."

Local retailers, particularly those in the rag trade, had signalled a slow lead in to their peak Christmas season as they squeeze margins to compete with overseas online retailers luring customers with discounted products. Pumpkin Patch, the unprofitable childrenswear chain, has flagged to its shareholders it is at risk of breaching its banking covenants if the season doesn't deliver sales, while rivals Kathmandu Holdings and Warehouse Group have bemoaned challenging conditions in the lead up to Christmas.

Today's figures show apparel spending in December advanced 2.4 percent from November, to a seasonally adjusted $292 million. Consumables, the largest measure in the series, gained 0.8 percent to $1.7 billion in the month, as hospitality increased 0.8 percent to $777 million. Durables fell 0.6 percent, extending November's 1.1 percent decline, to $1.1 billion.

On an unadjusted basis, core retail spending climbed 5 percent from the same month the previous year to $4.98 billion, with hospitality surged 9.9 percent to $845 million, consumables advanced 5.5 percent to $1.98 billion and durables climbed 3.3 percent to $1.72 billion. Apparel rose 1 percent to $437 million.

Total retail sales rose 3.5 percent to $5.88 billion, while total spending increased 4.1 percent to $7.47 billion.

The number of core retail transactions rose 7.7 percent from December a year earlier to 103 million, and was up 8 percent across all industries to 139 million. The average value per transaction rose to $54 from $51 in November.

Spending on debit cards made up 54.3 percent of total transactions down from 54.4 percent in November.

(BusinessDesk)