New Zealanders continue to do so aggressively amid the cost of living crisis, with the Reserve Bank today setting out its plan to control inflation.
Chocolate maker Le Petite Chocolat is among many retailers finding the recession hitting hard.
“Business has obviously slowed down, especially foot traffic and retail spending in general is affecting us,” Selcuk Gedar of La Petite Chocolat told 1News.
While customers coming in to get candy for themselves “are down a little bit,” he said, giving gifts to others “is still going strong.”
Secondo Boutique in Thorndon has also seen a decline in customers.
“The traffic is a lot less than before, up and down, but it’s definitely a lot slower,” owner Megumi Wolford said.
As prices rose, shoppers cut back.
“I usually go with something a little nicer,” one shopper said.
Another added: “I shop for fewer items, and try to mix and match a little more.”
Reserve Bank Deputy Governor Paul Conway outlined the challenges New Zealanders face as the central bank announces its plans to reduce inflation.
“Good progress is being made in bringing inflation back to target but increased spare capacity in the economy is likely to reduce inflation pressures further,” he said.
The unemployment rate must rise to bring inflation down to 2%.
Satish Ranchod, an economist at Westpac, said that although the number of people losing their jobs had “risen”, it was “still only at moderate levels”.
“This will be difficult for many families, but it could be worse if we do not reduce inflation,” he said.
“This erodes everyone’s living standards.”
The central bank also asked companies to stop raising prices.
It comes as New Zealanders will find out whether the country will officially remain in recession after the latest GDP figures are released tomorrow.
Although the economic mood appears bleak, there are some glimmers of hope.
The country witnessed its lowest rise in food prices in five years, rising by only 0.2%.
There is also more than $120 billion in infrastructure spending underway.
“Infrastructure has been strengthened, but the cost increases have been enormous,” Ranchaud said.
“I think there will be a huge focus now on controlling costs. That will be a difficult balance.”
“The big issue now is how much we can see it declining,” Ranchaud said.
“In areas like grocery stores, people are actually choosing to conserve their spending but are shifting away from things that are nice to have and focusing more on value for money.”
Wolford said she had to make some changes to ensure her business stayed afloat.
“It’s like survival really. I decided to start wearing more men’s clothing as well and try to do more social media,” she said.