Fuel Price Decline Boosts NZ Card Spending, But Recovery Remains Mixed

Electronic card spending in New Zealand saw a modest increase of 1% in July compared to June, according to Bank of New Zealand (BNZ) data.

The boost in discretionary spending was largely driven by falling fuel prices. The hospitality and apparel sectors experienced the strongest monthly gains, rising about 3%, but remained around 2% below their pre-fuel price shock levels in February.

Despite this uptick, BNZ noted that the trend remains mixed and uneven. They attribute the recovery to a combination of factors, including tourism spending and population growth, particularly in the South Island.

However, BNZ cautioned that the positive impact of declining fuel prices might be short-lived, as prices have begun rising again more recently. Additionally, consumers continue to face challenges from high inflation, a tough jobs market, flat house prices, and rising mortgage rates.