New data from Kiwibank reveals New Zealand’s penny-pinching summer

• New research from Kiwibank reveals that most Kiwi remain hesitant to spend as they continue to feel the economic squeeze.
• 2023's seasonal spike was muted over the last quarter, with consumer spending just 0.4% higher than in 2022.
• The picture for 2024 looks similar as household disposable incomes remain tight.

Kiwibank, the largest New Zealand-owned bank, is providing insight into New Zealand's penny-pinching summer with the release of the Kiwibank Household Spending Tracker for the December 2023 quarter, and January 2024.

According to data collected from Kiwibank's electronic cards, consumer spend rose 5% over the December quarter, but was muted compared to previous years – up just 0.4% on 2022. Transactions were down by 3% over December compared to 2022 and down 3.3% on the quarter.

“We saw a 6.2% increase in home and online entertainment at the expense of nights out. And not even the allure of Black Friday and Boxing Day sales were appealing enough for Kiwi to loosen the purse strings."

Financial conditions remain tight, and household disposable incomes are being squeezed. As New Zealanders find ways to alleviate the pressure, discretionary items such as home electronics are being removed from the budget.

Battle of the Anniversary Weekends

Hospitality spend historically accelerates into the December period but the data revealed a decline in 2023. The value and volume of spend at restaurants and bars decreased by more than 3% over the quarter. Café spend fared just a little better.

The data reveals that weak hospitality spend looks to have continued into the start of 2024, with the number of transactions made at restaurants and bars still underperforming.

“New Zealand's two biggest cities enjoyed their respective anniversary days in January, with Auckland taking the crown for 'Big Spender' with a 6% lift in total spend volumes at restaurants, bars, and café s over the long weekend, compared to 2023. In contrast, spending volumes during the Wellington anniversary weekend declined by 3.2% compared to 2023,” said Vergara.

“Auckland’s Wynyard Quarter hosted the finale of the Red Bull Cliff Diving World Series, which likely helped make a splash in spend over the long weekend.”

Pot lucks and long lunches

Grocery stores experienced a 5.4% rise in spend, with December 23rd and 24th accounting for just under 10% of the month’s total purchases. The data revealed a 6.2% rise in fruit and vegetables, as well as a 28% increase in spend on alcohol and liquor.

“Again, this shows that Kiwi took to entertaining at home, stocking the pantry and keeping busy in the kitchen as a way to keep discretionary spending low. There was also a 5.1% lift at the local butcher. Meat prices have come under pressure as products, especially lamb and mutton, from across the Tasman, continue to flood overseas markets. The value of spend is down 1.2% from last year's levels despite the rise in volumes,” said Vergara.

Bargain hunting

Some retail categories managed to record a rise in volumes as the value of spending fell. The number of transactions made on home contents and furnishings rose 1.3% compared to 2022's levels, while the value of spend declined by 5%.

Other retail, however, recorded a drop in value and spend volume. Both the value and volume of clothing spend declined by around 11% compared to a year ago. Home electronics experienced the same, with a 1.8% drop in values and a 3.5% drop in volumes.

“Everywhere you looked, retailers seemed to offer bargains, discounts and deals. For some, November's Black Friday lasted a week, while Boxing Day sales began before we even cut into the Christmas ham. On top of that, the type of retail on sale was across the spectrum – from clothing to couches, electronics to e-bikes, frisbees to fridges, and hammocks to hardware.

“Overall, it’s evident that retail spend is struggling as household demand struggles amidst tight financial conditions.”

View the full report on our household spending insights page.