Consumer spending 'tanks' as Kiwis put their cards away

Consumer spending in February has tanked, according to the latest card transactions data.

Total card spending dropped 2 percent despite climbing prices and strong population growth.

In an economic note, ASB bank said the spending figures were weaker than expected - especially in fuel and hospitality.

"Despite a 6 percent jump in petrol prices, fuel spending declined by 3.7 percent."

Even though New Zealand enjoyed a good summer, the bank noted hospitality spending was down by 4.4 percent.

Westpac's senior economist Satish Ranchhod said the softness in spending highlights the squeeze on households from high inflation and interest rates.

"More families have been switching to more budget-firendly options and they're foregoing 'nice to haves' in favour of necessities."

Consumer spending 'tanks' as Kiwis put their cards away
Photo credit: Getty Images

ASB said sizeable economic headwinds still face Kiwis and households face weekly increases of $70 a week for 2024.

The bank also said the housing market is failing to fire despite strong net immigration. The labour market has also switched from a "job-seekers" market to an employers market.

However, ASB doesn't expect any cuts in the official cash rate by the Reserve Bank until November.