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Is this the calm before a storm of credit card thrashing?

Retail spending using electronic cards was only 1.2 percent higher nationwide in the first seven days of December than in the same week last year, according to Paymark, which processes more than 75 percent of New Zealand card transactions.

However, it suggests this is “a pause before another rush” and that the Black Friday sale in November may have bought spending forward.

Meanwhile, Westpac’s economists are suggesting the recent fall in petrol prices “should mean a little more left in consumers’ wallets for other spending.”

Paymark says the $1.2 billion in spending in the first seven days of December was 10 percent higher than the average weekly spending between January and October this year.

But compared with spending in the same week last year, spending was highest last week in Palmerston North, up 7.5 percent, and Southland, up 6.4 percent, but low in Auckland and Northland, up just 0.1 percent, and negative 1 percent in the Wairarapa.

“Typically, spending builds through the last two weeks of November and the first week of December, then ramps up rapidly in the last couple of weeks ahead of Christmas Day,” Paymark said.

“This year, the three weeks were again busy but spending in the week of Black Friday was slightly above that of last week,” it said.

But it is predicting a surge is still to come. “In the week ahead, we are likely to increase our buying at department stores, recreational goods shops, electrical shops and clothing stores by 10-25 percent, only to step up even further in the last few days before Christmas.”

Paymark said in the last seven days before Christmas, it expects an 80-180 percent lift compared with the average week between January and October.

It expects spending at food and liquor merchants will rise 60-70 percent above average in the last seven days before Christmas.

Westpac said it is expecting a temporary improvement in the housing market due to recent falls in mortgage rates and the loosening of the Reserve Bank’s loan-to-valuation restrictions from Jan. 1.

Westpac cut its two-year fixed mortgage rate from 5.5 percent to 4.79 percent in September and it also has a 'special' offer at 4.29 percent.

“The improvement in the housing market is likely to be felt particularly acutely in Auckland,” the bank said.

“The Auckland housing market has been treading water since mid-2016, so even a modest lift in prices could generate a bit of momentum in consumer spending in the region.”

Westpac notes that oil prices peaked in early October with Brent crude rising above US$86 a barrel but that has since receded to about US$60.

The New Zealand dollar has also risen over that period, helping to make petrol prices cheaper.

“For New Zealand consumers that means they’ve seen a noticeable drop in prices at the pump from a peak of around $2.48 per litre in early October to around $2.08 per litre currently,” the bank said.

“With petrol costs gobbling up a smaller share of household budgets, there should be a little extra left to spend in other areas.”

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