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Electronic card spending flat as pre-GST buys fail to materialise

Wednesday 15th September 2010

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New Zealand spending on debit and credit cards rose marginally in August, propped up by increased non-retail items, with little sign of a flood of consumer spending ahead of the October GST increase.

The seasonally adjusted value of total electronic card transactions rose 0.1% in August compared with the previous month, according to Statistics New Zealand, after spending eased off after five months of growth. The value of transactions in retail and core retail, which excludes the motor vehicle-related industries, both eased 0.2% in August.

These decreases were led by a 1.1% fall in durables, which includes furniture, hardware and appliance retailing, and a 0.6% fall in consumables such as food, liquor and chemist retailing.

“The decline in spending on durables suggests households have yet to bring forward purchases of major household items in anticipation of the GST increase in October,” said ASB economist Christina Leung.

“The small decline in consumables likely reflects the small decline in food prices in the August month.”

The declines were offset by a 2.3% rise in non-retail industries, which include services such as travel, health and wholesaling.

Trends for the value of transactions in the total and retail series have both been flat since early 2010.

The share of electronic card transactions in the retail industries has been slowly increasing over time, accounting for 60% or all retail spending for the year ended June 2009, compared with 58.8% for the previous period.

Annually, credit card use, as a proportion of the total transaction value, has been falling since September 2008 with a corresponding rise in debit cards, Statistics NZ said.

Credit cards accounted for 44% of transactions in the year to August 2010, the lowest proportion since the series began in November 2002.

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