Retailers say shoppers are already curbing their spending after the hike in the official cash rate. File photo Photo: RNZ/ Marika Khabazi
Some Wellington retailers say shoppers were already curbing their spending before the Reserve Bank asked New Zealanders for help cooling the economy.
The Reserve Bank has asked New Zealanders to rein in their purchases, in an effort to create a slight recession and take some heat out of the economy.
Despite this, Black Friday sales are underway around the country.
Read more:
- Recession explainer: What you need to know
- OCR hike: Adrian Orr apologises for 'significant economic shocks'
Reserve Bank governor Adrian Orr, responding to questions from MPs at the finance and expenditure committee on Thursday, accepted the central bank was engineering a recession to combat inflation.
"The quicker inflation expectations come down, the less work we need to do and the less likely it is that we have a prolonged period of low or negative growth," he said.
Shoppers on the streets of Wellington on Thursday told RNZ that was no problem - they had less money to spend anyway.
"The eye sees what it wants, and yet the pocket is saying otherwise," one said.
Another said he was "just living within my own means".
Another shopper said: "I think it will affect what I do, in the sense that my money won't go as far, and I'll probably look more for bargains."
"I think some people are already spending less," said another, "probably because they haven't got the money to do anything else."
Businesses were noticing a slow down, too.
Julie Gubb from Gubb's shoestore in central Wellington said these days there were fewer customers, with less appetite for spending since the pandemic began.
Foot traffic past the store was down by half on pre-pandemic levels, she said.
"That's probably a result of people working remotely, but I'm sure that they probably have got into a habit of needing less, and buying less."
The store had been trading for more than 70 years, opened by Laurie Gubb in 1946, and then passed down to his son, Julie's husband Paul.
Julie Gubb said the plan was to close the store at the end of the year, as they opted out of a difficult retail market.
The owner of Cuba Street art and clothing store Chili, Micky Mo, said the first two years of the pandemic were tough, but this felt tougher.
"The vibe has changed," Mo said. People were less excited and prepared for Christmas, with no spike in customers around this time as she would normally expect.
For this year's Black Friday sale, she would be discounting more things, and by larger amounts, to try to meet people's budgets.
Retail NZ chief executive Greg Harford was worried the Reserve Bank's advice could lead to serious economic carnage, particularly for small to medium-sized businesses.
The bank's advice would be a difficult pill for businesses to swallow, especially those which struggled to get through the pandemic, he said.
Auckland's Heart of the City chief executive Viv Beck told Morning Report she doesn't believe the Reserve Bank's plea for New Zealanders to spend less will dampen enthusiasm for Black Friday bargains. She said there had been a progressive uptick in spending since the pandemic.
"It is the biggest, or one of the biggest, spending days of the year, and it sort of kicks off that Christmas spending" - Heart of the City chief executive Viv Beck
"There's definitely concern there with people starting to make choices about what they can and can't afford," she said.
"I think people will make their own choices depending on their circumstances. But I think in terms of Black Friday, today, we will see people seeking bargains.
"It is the biggest, or one of the biggest, spending days of the year, and it sort of kicks off that Christmas spending. We're still hoping to see a good December for our businesses, because with a difficult year likely ahead it's pretty critical that that we do see some sales for them."