Rising fuel prices may be hurting spending

Paul Brislen
Paul Brislen
Higher petrol prices may be hurting spending in other sectors of the economy, April Paymark figures suggest.

Spokesman Paul Brislen said yesterday spending growth through Paymark had slowed in recent weeks.

Annual growth between April 2017 and April 2018 was a low 2.9%.

In seasonally adjusted terms, underlying spending fell 1.4% from March 2018.

One contributor was a lower volume of transactions at fuel stations which, in turn, lowered spending at fuel stations through Paymark in spite of petrol prices being higher this year, he said

Fuel spending fell 0.9% from April last year to April this year.

``More generally, it is possible higher petrol prices are having a dampening effect on demand with other sectors but the effect so far in the first four months of 2018 appears to be modest,'' Mr Brislen said.

Petrol prices rose again yesterday.

The relationship between fuel prices and spending growth was of longer-term interest given the prospect of higher petrol prices due to higher petrol taxes and possibly also resulting from a continuation of the recent price trend in oil prices.

Higher pump prices had the potential to reduce spending elsewhere but Paymark figures in recent years suggested the effect on other merchants of pump increases of the order to 10c to 20c a litre were likely to be modest, he said.

The average petrol price was about 10c higher in the first four months of 2018 on prices a year earlier.

The most noticeable effect of the increase had been the lower volume of transactions through service stations and an increase in the average service station transaction of 1.5%, well below the 5% pump rise.

``Both figures point to higher petrol prices dampening petrol demand, reducing any potential budgetary spillover to other sectors.''

Otago and Southland shoppers continued to open their wallets in April, although the amount spent on each item seemed to be less.

Otago had 6.1 million transactions in April, up 7.6% on April last year. The amount spent in April was $291million, up 4.3%.

Southland had 2.24 million transactions, also up 7.6%. The value of those transactions was $110.6million, up 6.6%.

Mr Brislen said a key contributor to the slow April figures appeared to be changing holiday patterns.

First, the Easter period extended into early April, making for a slow start to the month for many merchants.

The annual growth rate declined to a ``mere 0.2%'' in the last week of April in the Auckland-Northland region.

A partial offset was provided by increased spending in smaller regions such as Gisborne, Hawke's Bay, Wairarapa and the West Coast, suggesting more holidaying occurred during the second week of the school break this year.

The change in Easter dates might also have had wider effects on spending as there was a noticeable fall in spending among housing-related and accommodation merchants in April, following surges in activity in March, he said.


 

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