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Printable version
Key Statistics - article, April 1999, p7.
Looks at the changes in consumer and household spending patterns and how these reflect changes in the economy and individual and social behaviour.
Consumer expenditure 19981
The following article is based on the publication Consumer Expenditure Statistics 1998, due to be published at the end of April 1999. The book reviews consumer expenditure in New Zealand within the overall framework of the New Zealand System of National Accounts. Patterns of consumer spending are examined from national accounting, Household Economic Survey, Retail Trade Survey and Consumers Price Index perspectives.
Changes in consumer and household spending patterns reflect changes in the economy and in individual and social behaviour. Among the factors influencing spending patterns are changes in government policies, prices, incomes, consumer preferences, the types of goods and services available, and household and family structures. In particular, the last decade has seen the removal of many import restrictions, lower rates of overall inflation, and a greater variety of consumer goods. These range from footwear and apparel to sophisticated electronic appliances. There has also been a shift to user pays, notably in health and education.
Specific changes have been in food expenditure, particularly increased spending on ready-to-eat foods, lower expenditure on clothing and footwear and increased spending on services. These trends are highlighted throughout Consumer Expenditure Statistics 1998.
The following is an excerpt from Part 4 of the report.
Household spending patterns
Spending patterns of private New Zealand households have changed in recent years, as have spending pattern differences between households. Changes over time reflect changes in the economy such as economic policy (eg removal of import subsidies) and changing consumer preferences. Differences in expenditure between households reflects characteristics such as household size, income and wealth. Analysis of these factors is based on statistics from the annual Household Economic Survey (HES), mostly for the 10-year period from the year ended March 1989 to the year ended March 1998 (see Table 1).
Spending patterns can be analysed by examining the proportions of total household spending on particular groups of goods or services (see Table 2). For example, in the 1998 HES 16.6 percent of household expenditure was on food and about one-tenth of that, or 1.7 percent of total expenditure, was on meat. The same proportion was spent on food in 1989 (16.6 percent) but more than one-eighth of food expenditure, or 2.2 percent of total expenditure, was on meat.
Comparisons of HES expenditure data in real or constant dollar terms make use of the Consumers Price Index (CPI) as discussed in Part 6 of Consumer Expenditure Statistics 1998. Real expenditure takes account of different relative price changes by deflating nominal expenditure - ie removing the effects of inflation - and expressing expenditure in the dollars of a particular point in time (see Table 3). Relative price movement differences can sometimes be the reason why household spending patterns change over time; other reasons include changes in supply or demand such as greater product diversity or changing consumer tastes.
The reference period for real expenditure used in this chapter is September 1997, which corresponds to the middle of the 1997/98 HES year.
Total household expenditure
Real household spending (Figure 1) shows real expenditure was highest at the beginning of the decade and lowest between 1992 and 1994. Real expenditure for the year ended March 1998 was up slightly from 1997.
Spending patterns
In the HES, expenditure is grouped into seven broad categories: food, housing, household operation, apparel, transportation, other goods and other services. The proportion of expenditure on these groups over time provides a broad measure of spending patterns and how they change. Figure 2 shows household spending by group as a proportion of total household expenditure for 1988, 1993 and 1998. The graph shows a significant increase in other services as a proportion of household spending, and a significant decrease in apparel. It also shows spending on housing has continued to make up the largest proportion of household expenditure, accounting for 18.8 percent in 1998.
The second largest expenditure group in 1998 was transportation, accounting for 17.9 percent of household expenditure. Other services was the third largest group (17.1 percent of household expenditure), a significant increase from 1988 when it was the fifth largest group. Although this group includes only those services not specific to one of the other six groups (for example, telephone rentals are included under household operation), the increase reflects the growing importance of services in the New Zealand economy. Spending on food (16.6 percent), household operation (13.9 percent), other goods (11.9 percent) and the smallest group, apparel (3.9 percent), made up the remainder of household expenditure in 1998.
Since 1994 real consumer expenditure has generally been increasing. Changes in the level of expenditure on durable goods have been noted as evidence of growth in consumer confidence since 1994. This recovery followed a period in the early 1990s when falling real disposable incomes, relatively more part-time workers and higher unemployment rates led to a decline in consumer spending. Although real expenditure fell slightly in 1997, it recovered again in 1998.
"Consumer Expenditure Statistics 1998" brings together a range of different statistics on the way New Zealanders spend their money. Included in the publication are sections on household income and outlay, measuring consumer expenditure in the national accounts, household spending patterns, retailing and Consumers Price Index.
"Consumer Expenditure Statistics 1998 " is available from Statistics New Zealand and at selected good bookstores for $35.00.
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Consumer Spending
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