Nick Brunsdon: Infometrics Principal Economist on retail spending falling by $160 million in April

Kiwis appear to be cutting back on discretionary spending as fuel prices bite. 

Data from Stats NZ shows retail electronic card purchases fell 1.3% last month, with Kiwis buying less or cheaper food and cutting back on their clothing budget. 

Non-retail spending on the likes of travel and health is down 4%. 

Infometrics Principal Economist Nick Brunsdon told Mike Hosking it makes sense, as these are more discretionary purchases. 

He says people are bound to spend less on holidays, or even at the dentist, if they're trying to make up the dollars to fill the tank. 

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Episode Transcript

Speaker 1 (00:00):
And later start around that money. How much was spending,
how loose the old wallets are. Obviously it should be
down given the price of petrol, but it's down more
than we thought. I think one point six percent dropped
for March. Nick Brunson is principal economist and in for
Metrics is back with a snak morning to you. Was
it more than you thought?

Speaker 2 (00:18):
A little bit more? Yeah, and interesting to see where
people are making the money up as well. I'm spending
less on fuel suggests that we're not cut back from
the panic buying in March. Yeah.

Speaker 1 (00:31):
See, that's the part that surprised meat, because of course
then the month petrol went down from the peak. Therefore,
if you had a dollar and you spent a dollar
on petrol, now you're spending eighty five on petrol, you
take the other fifteen spend it elsewhere. It doesn't seem we.

Speaker 2 (00:42):
Did well bearing a mine. From March to April. Price
is still went up, largely the sort of the decrease
that hasn't really come through until May. So with prices
going up in April, people still spent less, which suggests
it was an awful lot of panic buying. Going on
a match but the people really are trying to travel

(01:04):
less to kind of make you a budget balance consumables.

Speaker 1 (01:07):
It helped me out here because you're the expert. I'm not.
When we say consumables and it's down two point one,
what are consumables?

Speaker 2 (01:13):
Literally boggle that we'll be supermarket spend things you use
and eat in the month. So people have teared back
what they're spending at the supermarket to make up for
that increased fuel bill, probably to make up for last
month's increase field ball as well.

Speaker 1 (01:27):
Okay, then non retail, so it's medical, health, travel, et cetera.
Down four. That's material fors material, isn't it?

Speaker 2 (01:33):
Yeah? Definitely. It's also the most discretionary part of the
spending baskt. It makes sense you're going to spend less
on holidays, less on potential, less of the dentist if
you're trying to make up make up your dollars to filter.

Speaker 1 (01:45):
In these solid numbers. In other words, when you see four,
can you get noise around monthly numbers or do we
take four as being four?

Speaker 2 (01:54):
I still wouldn't make too much sort of a song
and darter that one month and results. And it's interesting
in that you know was that big wall of a
fuel price increases in March. People didn't spend, didn't cut back,
They're spending on others. But it has I guess people
have sort of stood on it and said, oh, maybe
we shouldn't be going to to RaRo this this winter
and sort of pull back. Yeah.

Speaker 1 (02:15):
See, but as far as I know, people aren't going
to Rarow, I mean, we're still spending on I mean,
are we I mean? Or am I just I just
surrounded by people to go to Rara Tonga. It just
seems everyone's traveling still, although you would argue the numbers
just prove that not to be true.

Speaker 2 (02:29):
There's also a big leg you know, people are probably
poking quite a few months in advance, and I think
when it was when the fuel prices went up in March,
some people maybe set in the sidelines and thought it
might have been a flash in the tan. And although
fuel prices have come back are tiny, but they're still
still pretty expensive. And I think people are starting to say, oh,
it's going to be around for a while, we need
to cut out class.

Speaker 1 (02:47):
So is that the psychological thing? Now we've worked ourselves
into a fiscal funk?

Speaker 2 (02:53):
I think so and yeah, there's been a lot of
noise around theease fires and in the end of the war,
and I think we're sort of progressive, losing what the
faith we did heaven those these flies, and I think
sort of settling in for a longer ride, which means
lower spending.

Speaker 1 (03:08):
Well, what does doctor Ranna do next week, because you
can't hike with this.

Speaker 2 (03:12):
No literally, I don't think next week. I Ultimately, these
price increases are coming from otherseas, fuel, fertilizer. That's sort
of okay, that's not her problem. Where it does start
to become her problem is when other businesses are starting
to pass through those cost increases in an aggressive way.
So if we see the supermarkets starting to push through
diesel related cost increases quite aggressively, that's the point in

(03:35):
which we start to get inflation locally, and that's the
point in which we have to start hiking to sort
of get things back.

Speaker 1 (03:40):
Under So what are you saying, July Ish.

Speaker 2 (03:44):
I think so. I think that's that's becoming more likely,
and certainly towards the end of the year, expects couple
of hyps.

Speaker 1 (03:50):
Interesting, all right, and appreciate your expertise. Nick Brunston who's
the principal economist said Informitris with us this morning.

Speaker 2 (03:55):
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