Core consumer spending continues to increase

Kiwi consumers spent more on alcohol and food last month as the silly season started.

The latest Statistics New Zealand core retail spending figures show that, seasonally adjusted, the value of electronic card spending was up 0.6 per cent in November. This follows a 1.8 per cent boost in October.

Hospitality spending rose 1 per cent in November compared with the same month last year at a total of $687 million.

"Consumables, such as food and liquor, accounted for most of the extra spending in November," industry and labour statistics manager Tehseen Islam said.

Karaka Cafe on Wellington's waterfront and its adjacent Te Raukua Wharewaka Function Centre were busy in November, manager Paul Retimanu said.

"We had some quite strong growth in the cafe and also our functions. The weather was generally good, which obviously helps in the cafe side for sure. Christmas functions have been good for us this year with demand within the last week of November and first two weeks of December quite strong. Per head spending is all very similar to last year," he said.

Lambton Quay pub The Royal was experiencing its busiest time of the year, according to duty manager Lyndon Kokay.

"Everyone wants a table and they want it now, basically. We had a 100 person function upstairs at lunch time today and had the ground floor open to public so we probably did 160 covers all up . . . and we will do the same again tonight."

The consumables spending category had its biggest rise since April, up $22m to $1.6 billion nationally.

A total of $288m was spent on apparel last month, down 0.7 per cent from November 2012. Spending on durables, including furniture, hardware and appliance retailing, pharmacy, cosmetics and toiletries, fell almost 1 per cent at $1.1b.

ASB economist Daniel Smith said that overall, consumer spending continued to rise at an encouraging pace.

"November's card spending data suggests more strength in the consumables sector, a trend that inwards migration and stronger population growth should support. Despite fairly strong growth in spending and sales, a combination of factors are keeping retail price growth very low. While consumers are willing to spend, they are perhaps more discerning and have more options in terms of where to spend their dollar than in the past."

ANZ Institutional senior economist Mark Smith said spending growth was stronger than expected, but consumption could be the sacrificial lamb in the years ahead as more resources will need to flow to meet the investment needs of a strengthening construction sector.

"Rising labour incomes and high commodity export prices suggest a reasonable income backbone behind the spending lift, but the RBNZ will be keen to see some restraint on the part of households to reduce the amount of work the OCR needs to do."

There were 118 million electronic card transactions in New Zealand during November.