Most people who drive will likely have noticed that the price of petrol in recent years has not exactly been as friendly on the wallet as it was a decade or so ago. In fact other than a three week stint in July last year where it only just dipped under, the average weekly price of regular 91 hasn’t been below $2 per litre since February 2011. The price per litre is shown in the graph below.
What’s interesting is to see the impacts that this is having on peoples spending.
Stats NZ release monthly figures on the amount of money spent on electronic cards across the country. This doesn’t include purchases using cash, vouchers etc. but does give a break down by various industries and so provides a good indication as to where people’s money is being spent. The data is broken down by
- Core Retail
- Core Retail
- Non-retail industries (excl services)
The fuel industry sits under retail and as it’s broken out it means we can get an idea of just what impact the cost of increasing fuel prices are having on peoples spending – and the result isn’t good.
First of all here is the percentage of retail spending that went on the fuel industry based on the 12 month rolling totals and it’s gone from 10.5% a decade ago to just over 16% now. In other words we are now spending a much greater proportion of our money on fuel than we have in the past.
The next graph shows the change in the fuel industry spending compared to the rest of the retail category indexed back to September 2003. Again it shows that spending on the fuel industry is rising faster than our spending elsewhere.
However I understand the fuel industry figures are likely to included spending in stores associated with petrol stations i.e. people buying inconvenience items. The graph below how the percentage on the fuel industry compared to the average price of petrol and as you can see the two generally tend to follow each other. This graph is based off the monthly results so the big downward spikes will be the impact of Christmas increasing retail spending in other areas.
So why is this important? Well the money that is spent on transport – which is probably mainly used for commuting - is money that can’t be spent elsewhere in the economy. All up New Zealanders spend about $52.5 billion on cards in the 12 months to the end of October (which is double what we spent a decade ago). Imagine if over the last decade we had better developed options to allow people to get around without needing to always drive that had allowed our spending on fuel to stay at 10.5%. The difference between that and the percentage we spend now would be about $3 billion a year (on cards alone) which is almost 40% of what we spent on hospitality over the same time period. Imagine what that would do to our liveability and happiness if people could afford to spend more on activities or what would it do to lower income families who are struggling.