11 Apr 2013

Electronic card spending falls

7:51 am on 11 April 2013

Retail spending on electronic cards fell for the first time in six months led by a decline in spending on big-ticket items and clothing.

Official figures show spending using debit, credit and charge cards fell a seasonally-adjusted 0.5% in March from the previous month.

Core retail sales, excluding fuel and vehicles, fell 0.8%.

On an annual basis, the pace of growth rose 3% to $5.8 billion.

The Easter period fell during March, which resulted in two fewer trading days.

ANZ senior economist Mark Smith says despite the fall it has still been a solid quarter of retail spending on electronic cards which suggests a strong contribution towards Gross Domestic Product for the quarter.

Spending on durable goods like furniture, hardware and appliances, as well as clothing and footwear experienced the biggest declines.

Mr Smith says the drop in spending on clothes is probably because people spent more time at the beach in the fine weather and less time at shopping malls.

He says although there was a pull-back in spending on durable goods, the underlying momentum there remains very strong.

Mr Smith says the drought will be a major factor on consumer spending for the rest of the year and will have a negative impact on producer incomes.

Higher food prices will also have an adverse impact on consumer spending, as will a fragile labour market outlook and the increase to KiwiSaver contributions from April.

Electronic card figures cover about 65% of retail sales.