Card spending rises in September ahead of GST increase

Monday 11th October 2010

New Zealand spending on debit and credit cards returned to growth in September, as consumers stocked up on household goods, food and petrol ahead of the hike in GST to 15%.

The seasonally adjusted value of total electronic card transactions rose 1% in September compared with the previous month, according to Statistics New Zealand, having flattened after five months of growth in the first half of the year.

The value of card spending in core retail industries, which excludes motor vehicles, rose 1.4% in September. The gain was lead by durables - made up of furniture, hardware and appliance retailing - which rose 4%, the biggest rise in this industry since June 2007.

Consumables, made up of food, liquor, and chemist retailing, rose 1.1% in September, while fuel spending increased 2.9%. Total retail card spending rose 1.5% compared to the previous month

"These results are in line with reports from Paymark earlier last week of a rush on the last day of September to fill up on groceries and petrol ahead of the GST increase the next day," said ASB economist Christina Leung.

"In particular, there was much publicity towards the end of September that petrol would increase by 7 cents per litre at the start of October as a result of an increase in GST and excise taxes."

Leung said that beyond the GST increase the recovery in retail spending appears to remain in place with spending on services ticking up 0.2%, building on the 3.1% gain in the previous month. The 0.5% increase in spending on apparel reversed out the previous month's decline.

The share of electronic card transactions in the retail industries has been slowly increasing over time, estimated to account for 61.4% of retail spending for the year to June 2010, compared with 60.8% in the same period last year, and 58.8% in 2008.

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

Credit card use accounted for 43.8% of transactions in the year to September 2010, the lowest proportion since the series began in November 2002.

Businesswire.co.nz

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