CBA: Card Spending Remains High, Growth Moderating

CBA note that their “internal credit & debit card spending data to 26 August 2022 shows that spending levels remain high but the broader trend is one of moderating spending growth. Our data is volatile on a weekly basis and there are seasonal patterns to spending. But the evidence suggests that total nominal spending has so far trended sideways over August after rising in July.”

• "We have been reporting for some time that we expect households to slow their spending as a result of the RBA tightening cycle. But the change in spend will not be immediate. There is a lag between when the RBA announces an interest rate increase and borrowers seeing their minimum repayment increase. At CBA, there is on average a three month delay. This lag means that many CBA mortgage holders have only experienced a small increase in their minimum repayment so far. As mortgage repayments are reset upwards, households are expected to moderate spending further. There is a risk that the volume of household consumption contracts given inflation is running well ahead of wages growth. In addition, rising mortgages repayments for many home borrowers will result in less discretionary expenditure."
• “By industry, spending growth on clothing and footwear eased during August after some strength in June and July. Spending growth on transport also continues to decline on a smoothed basis but the weekly spend figures are showing signs of a flattening as petrol prices rise in some states. Petrol prices will increase when the fuel excise is restored in full at the end of next month which will likely lead to increased transport spending. Spending growth on recreation is ticking up but remains below the peak earlier in the year. Spending growth on eating and drinking out has fallen since the peak in May.”