Retail card spending to grow: ASB

Jane Turner
Jane Turner
Record low interest rates, record high net migration and strong tourist numbers will continue to support electronic card spending this year, ASB senior economist Jane Turner says.

Total retail card spending in New Zealand increased again in January, largely in line with market expectations.

Core card spending rose 0.6% month-on-month - driven by increased spending on durables and hospitality.

Ms Turner said hospitality spending growth had been the star performer for the past three months and was now sitting 13% higher than January 2015's levels.

‘‘This lines up with recent anecdotes of a particularly strong tourist season this summer.''

Total electronic card spending rose a more modest 0.3% in January. Petrol prices fell about 2.3% over the month and that fed into a 2% fall in the value spent on fuel in January.

Falling dairy prices - and dairy-related incomes - and lower Auckland house turnover and prices would remain key risks to spending levels for some time ahead, she said.

But on balance, the boost to spending from low interest rates, population growth and tourism would outweigh the risks.

‘‘As a result, we expect spending growth to remain modest heading into 2016. This has no implications for our official cash rate view and we continue to expect two more 0.25% OCR cuts in June and August this year.''

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