Electronic card transactions lifted 2.3 percent over summer compared to the 2024 average. File photo. Photo: 123rf
New Zealanders are likely to get back to normal spending patterns faster this year than they did after previous downturns, Kiwibank says.
It has released its latest spending tracker data, which shows electronic card transactions lifted 2.3 percent over summer compared to the 2024 average, but the increase was more muted than had been seen in previous years.
Economist Mary-Jo Vergara said it would probably be the second half of this year before spending returned to more normal levels.
"It depends on when rate cuts feed through. The turnaround will be faster than previous cutting cycles because the mortgage book has shortened up so people are feeling the impact [of interest rate cuts]."
She said there was a clear trend of people wanting to spend money on experience over the purchase of "things".
But she said that could be a short-term trend after the focus on shopping for physical items through the Covid period.
She said people cut back on high-end dining over summer but still prioritised socialising, with café spending rising nearly 3 percent and takeaway purchases increasing 3.4 percebnt.
Restaurant and bar spend declined 2.4 percent. She said that was likely to reflect budget constraints.
"Cafés and takeaways are an affordable way to stay social without breaking the bank."
Retail spending had a seasonal boost in December, up 3.5 percent, but overall, last year's retail spend lagged 0.7 percent behind the previous year.
She said travel spending was down, for both domestic and international.
Spending on flight bookings dropped by 4 percent, while hotel and accommodation spending had a 15 percent decline.
She said people might have been staying home to work on DIY projects instead - spending on home improvement was up.
"The outlook for spending this year is gradually improving. The first priority for many is restoring financial balance. The combination of changing interest rates and an expected rise in house prices should strengthen the financial position of many households. Secondly,
the cost-of-living crisis is easing as we enter a period of real income growth.
"While spending won't rebound overnight, the trajectory is looking more positive than it has in recent years."
There was a 8.3 percent increase in spending on gym membershps and fitness services.
Bergara said that was prabbly a cyclical change people thought about their new year's resolutions in January. "I will be interested to see how long it lasts."
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
