Shoppers Slow Down Ahead Of May Budget

Shoppers Slow Down Ahead Of Govt’s Watershed May Budget

A leading Auckland business group believes higher than usual anticipation ahead of the National Government’s second Budget is seeing consumers keep their hands in their pockets.

“This is lining up to be the most significant Budget we’ve seen for about 20 years when you consider the suggested changes around our tax laws, corporate and personal tax rates, and of course GST. Every New Zealander is set to be affected by this Budget, and so it’s no wonder people are taking a wait and see approach,” says Cameron Brewer, chief executive of the Newmarket Business Association.

“Statistics New Zealand’s latest retail figures and Paymark electronic card transactions for February were pretty soft when it came to core spending. Across the country there has not been a rally in retail that some may have expected so far this year. We put the recession to bed last year, but it seems consumers can’t shake off the hangover.

“Many consumers are focused on paying off debt, as it looks increasingly likely that interest rates will start going up from mid-year, not to mention all the unknowns around the Budget. Then of course unemployment hit 7.3% last month, and for many consumers there remains this aversion to paying full price.

“New Zealand shoppers have enjoyed some brilliant ongoing sales stretching back to 2008. In retail circles there is a real concern that people are now suffering from ‘full-price phobia’. That is – shoppers are so used to the discounted prices they are reluctant to pay full price.

“The last couple of months have been pretty soft in retail and no one’s predicting it to get any better until at least the Finance Minister gets to his feet on Budget Day. The 20th of May can’t come soon enough. It’s going to be a long autumn for some retailers.

“With consumer confidence subdued, retailers selling big ticket or discretionary products are overall feeling it the most. However if GST is to rise to 15% in October, we will see consumers splash out a bit on big ticket items after the Budget and before the higher rate takes effect.

“We’re telling retailers to keep the faith. The second half of 2010 is set to be better than the first,” says Cameron Brewer.

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