A leading economist believes inflation is skewing figures, which shows spending is up around New Zealand.
Statistics New Zealand released its latest data on electronic card transactions for September on Tuesday showing retail spending rose 1.4 percent on a seasonally-adjusted basis in September.
Spending rose across the majority of retail industries, with the largest contribution coming from consumables such as groceries and liquor, which was up $20 million (0.8 percent).
Infometrics principal economist Brad Olsen told AM on Wednesday the figures "look good on the surface" but inflation is skewing the results.
"We are definitely seeing the effects of inflation come through here, although the numbers do look good on the surface," Olsen told AM Early host Oriini Kaipara.
New Zealand is currently battling a cost of living crisis driven largely by skyrocketing inflation, which has risen to a whopping 7.3 percent as the country came out of the COVID-19 pandemic.
Previous data from Statistics New Zealand showed inflation is now the highest it has been in three decades. The last time it went above 7 percent was in the June 1990 quarter when it hit 7.6 percent.
As a result, the Reserve Bank of New Zealand hiked the Official Cash Rate (OCR) up several times in an effort to dampen spending and control inflation.
Statistics New Zealand will release the county's latest inflation data next week and Olsen is expecting to see that rise.
"So what you are seeing very much is those price increases are continuing to hit, New Zealanders might be putting more money out into the economy but they are actually being able to buy the exact same amount of stuff as they did before," Olsen said.
"People are getting less bang for their buck and you are very much starting to see a shift in where that money is going. So although the overall total does look better, realistically, inflation is very much skewing the figures."
Olsen had a mixed reaction to the latest spending data but added it did raise a few questions about the tourism sector.
"[It] reinforces the view we've been seeing that realistically the tourism sort of recovery is moving at pace and probably above a lot of people's expectations. Which is certainly positive after a pretty incredible few years, where we went from having huge amounts of overseas tourism to not a huge amount at all," Olsen said.
"Questions though, with growth in tourism spending over whether or not we can actually resource further growth in the sector, given everyone says they can't find staff."
With spending increasing, Olsen believes this brings positives and weaknesses.
"Now that's both a good and a bad thing. Good, because it sort of suggests spending is holding up, bad because the Reserve Bank probably wants to see that number come down," he told AM.
"They want to see economic activity slow back, just a touch more because of how hot inflation is. So, sort of suggests we're in a Goldilocks zone I think a little bit at the moment, things could be going a lot worse, but they could also realistically be going better."
Watch the full interview with Brad Olsen above.
