Households juggle mortgage buffers and rising living costs
Retail spending has “run out of gas” according to Westpac’s latest Retail Spending Pulse, with per‑person spending on Westpac cards slipping 0.1% in April and effectively moving sideways since January. The figures point to higher costs for day‑to‑day necessities crowding out other purchases as households tighten budgets.
Fuel remains the major pressure point. Spending on petrol climbed a further 6% in April after a 17% jump in March as the conflict in the Middle East pushed pump prices above $3 per litre.
Westpac says the “impacts of the ongoing cost-of-living crisis are as clear as the big neon sign outside your local petrol station.” Utilities spending rose 4% over the month following increases in electricity charges, while grocery spend lifted 0.7% as shoppers traded down to cheaper and home‑brand options.
Discretionary categories show a mixed picture. Spending on furnishings and appliances has held up, while hospitality outlays have flattened after an earlier fall.
Against that backdrop, travel was the clear weak spot in April: overall travel spend dropped 15%, including sharp declines in airfares and payments to travel agents, as higher fares, safety concerns, and the risk of cancellations dampened demand.
Regional and inflation pressures building
The squeeze is evident across most regions, with spending growth slowing in many areas and particular softness in Wellington, where confidence is low and discretionary spending has been under pressure. Tourism‑reliant centres are also contending with weaker travel demand and reports of cancellations linked to rising transport costs.
Westpac expects inflation to reaccelerate to around 4.5% in coming months as higher transport and materials costs are passed through more fully, keeping retail spending subdued through the middle of the year. That trend underscores ongoing strain on household budgets and the importance of existing repayment buffers.
Complementary Westpac research shows households are already adjusting, with a nationally representative survey of 530 people finding that 84% have changed or plan to change their behaviour in response to the conflict, including cutting non‑essential spending, driving less, and altering how they shop for groceries.
Read the full Westpac report for more details.
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