Household spending is poised to accelerate modestly this year, judging from the latest electronic cards transactions data for January, ASB economist Jane Turner says.
Statistics New Zealand released January figures showing total retail sector cards transactions fell 0.4% in the month, proving weaker than expected.
Most of the fall was due to a 6.7% fall in fuel spending as petrol prices dipped by a similar amount over the month.
Putting aside the fuel spending, retail cards spending was strong, with core spending rising 0.9% in the month, Ms Turner said.
Consumables spending continued its recent strength, recording a 1.3% lift in January.
This was the fourth month in a row of strong results, reflecting recent strong population growth.
Durables spending - washing machines, refrigerators and furniture - was the other star linked to the improvement in housing market activity from late last year, she said.
''After a lull in November and December, durables spending rebounded in January, coinciding with an earlier rebound in the housing market following the election.''
Ongoing employment growth and strong net migration inflows would continue to support spending growth this year, Ms Turner said.
Lower fuel prices would help further overall spending volumes in time, although it was dampening the reported dollar spend now through reduced spending on fuel.
''We expect a similar impact from lower interest rates over time.
''The main exception to the rule is likely to come in rural areas where the low milk [solids] price will constrain incomes and spending.''
At a glance
• Total retail cards spending weaker than expected.
• Weak headline results mask a strong bounce in core retail cards spending.
• Sharply lower fuel prices and a rebound in spending post-election giving momentum to retail sector.
• There are no implications for the interest rate outlook.
