NZ retail spending tapers off post-GST hike

NZ retail spending tapers off post-GST hike

By Paul McBeth

Dec. 14 (BusinessDesk) – New Zealanders were more reluctant to open their wallets in October after the government hiked goods and services tax to 15% and kiwis focussed on repaying debt.

Core retail sales, which exclude vehicle related spending, dropped a seasonally adjusted 1.6% in October after climbing 1.7% in September, according to Statistics New Zealand data. Of the 10 industry sectors out of 15 that reported declines, most were so-called big-ticket items, led by a 28% decline in furniture, floor coverings, houseware and textiles while electrical and electronic goods dropped 15%.

Total retail sales, including auto-items, dropped 2.5%, the biggest percentage decline since May 1997, with motor vehicles and parts dropping 13% in the month. The biggest increases came in supermarket and grocery store spending, which rose 4.2%, and fuel, which increased 3.7%.

“It is likely the September 2010 increase reflected spending timed to beat the GST rise on 1 October 2010,” the government report said.

Retailers have been struggling as households remain reluctant to resume spending in what’s been the worst recession in almost two decades, and that soft consumer demand has tripped up the country’s economic recovery. Earlier Last week, clothing retailer Hallenstein Glasson Holdings told shareholders December is going to be a “make or break” month as competition tightens amid subdued consumer demand.

Still, the latest data from EFTPOS service provider Paymark showed the value of spending rose 5.5% last month, led by car repairs, supermarket spending and footwear. Paymark accounts for about three-quarters of all electronic transactions.

(BusinessDesk)

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