Westpac Card Spending Shows Sales Volumes Continue Contracting

Westpac card data is showing that spending eased to 3.4% y/y in January after peaking at around 14% y/y early last year but with retail prices estimated at around 4%, real spending declined again. Q4 retail sales volumes fell 4.0% y/y despite working age population growth of 3%. Spending on discretionary items is contracting. The RBNZ meets on February 28 and is expected to leave rates at 5.5% but is likely to remain concerned re inflation despite slower consumer spending.

• Westpac also notes that there is a significant difference between mortgage and non-mortgage holders’ spending with the former rising only 1% y/y in January compared with 4% for the latter. Interest costs have risen to 15% of disposable income from 10% in 2022 and Westpac expects the average rate paid to another 60bp this year.