New Zealanders paying more at the pump are masking a deeper and more troubling decline in everyday spending, according to Retail NZ.
Worldline data for March showed overall card spending rose just 0.5%, but Retail NZ chief executive Carolyn Young said that figure is being artificially propped up by a sharp 33% surge in petrol station spending.
Young called the 0.5% a ‘mirage.”
“Our analysis has found that behind that figure, fuel is doing the heavy lifting.”
“If you account for that rise in fuel spend, we estimate core retail spending actually dropped by 1.2% year-on-year. That tells us consumers have aggressively cut back on their spending elsewhere during March.
Young pointed out the unavoidable trade-off hitting Kiwi households: every extra dollar spent on transport is money stripped away from local retailers already under strain.
“Every extra dollar spent on transport is a dollar lost to a local retailer. After several years of tough trading for retailers, many don’t have the financial reserves to weather another sustained setback.
She warned that when official figures from Stats NZ are released later this week, they are expected to confirm what headline numbers conceal: that while overall spending may appear positive on paper, the “real” retail economy is sliding backwards in volume.
She said a stronger focus on spending within New Zealand could help soften the blow to the domestic economy.
“Keeping that money in New Zealand will be much more important to keep jobs, keep businesses open … this fuel crisis is going to have a major impact.”
Young added that many people have yet to fully grasp how far-reaching the consequences are beyond rising fuel costs.
“I think people haven’t really considered what the impact is beyond the pump.”
She stressed that the ripple effects will be widespread, given how dependent the economy is on transport.
“Any item that you buy is either brought into New Zealand from overseas or alternatively transported by road in New Zealand. 93% of freight in New Zealand is on road.”
With Stats NZ data already showing a decline in retail businesses in recent years, she warned the sector could be heading for another contraction, just as it appeared to be recovering.