New Zealand debit and credit card spending falls

Consumer spending on debit, credit and store cards fell last month in New Zealand and according to the central bank, domestic card spending increased at a slower pace of 2.3 percent from last year, even though overseas card spending experienced growth of 11.4%.

The tightened consumer spending is a further sign, alongside record-high interest rates and a slumping housing market, that the economy is being pushed into a recession.

Retail sales also fell sharply for the first time in more than four years in May, as households spent more on fuel and food, as there is a big reduction in both consumer spending and confidence, which may prompt the central bank to reduce interest rates in order to stimulate growth.

The economy contracted 0.3 percent in the first quarter as gross domestic product fell again in the second quarter.

According to a Colmar Brunton poll for Television New Zealand, consumer confidence fell in July, a 5 percent of the total polled indicated that they believe the economy will worsen in the next year and the worst of the credit crunch is still to come.

The slowdown has been felt by Warehouse Group Ltd, the nation’s biggest discount retailer as the group cut its profit forecast by 10 percent last month due to slowing sales and reduced margins as a result of higher import and haulage costs.

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