ST. PETERSBURG, Fla.– Despite inflation, strong consumer purchasing activity can be seen in the latest PSCU Payments Index, which includes member spending data through May.
The report also includes a “deep dive” on consumer payment trends during the rapid rise of inflation, examining spending patterns over the past 17 months during which the rate of inflation has risen from 1.4% to 8.6%.
Pointing to an environment of rapidly rising inflation combined with continued strong employment numbers, PSCU forecast that a continued combination of strong job growth and low unemployment will likely fuel further consumer spending, adding that inflationary pressures are driving lower real average hourly earnings and influencing consumer card preference (credit versus debit), as well as sector activity.
PSCU said its May results show credit card purchases were up 15% over 2021, while debit card purchases were up 6%.
‘Evolution’ in Behavior
“Overall consumer spending growth remained strong throughout May 2022, with the gasoline sector experiencing the top growth rates in both credit and debit as fuel prices remain elevated,” said Brian Caldarelli, EVP and chief financial officer at PSCU. “The Consumer Price Index increased this month as we continue to face the highest level of inflation in more than 40 years. While the Federal Reserve announced another rate increase this week, a pause in the series of aggressive rate hikes is unlikely until inflation returns to an acceptable level. In this month’s Deep Dive, we explore the evolution of consumer behavior and spending growth as inflation has steadily surged over the past 17 months.”
Key Takeaways
According to PSCU, key takeaways in the May report include:
- Consumer spending on cards continues to be strong, with credit purchases up 15% and debit purchases up 6% year over year. Gasoline posted top growth rates for all sectors in both credit and debit purchases in May and will continue to grow in June as the U.S. average price has surpassed $5 per gallon. Travel and Entertainment were second and third, respectively, for both credit and debit purchases in May.
- Consumer data indexed to January 2021 (when inflation was 1.4%) highlights the trend of greater growth in credit purchases (over debit) beginning in May 2021 and continuing through May 2022. Influenced by multiple criteria including pent-up demand in Travel and Entertainment, countered by cooling of purchases in the Goods sector, strong activity at Restaurants and high inflation fueled by the energy sector, the trend is expected to continue – and even widen – with waning consumer liquidity.
- The average credit card balance for May 2022 was $2,724, up 2.9% (or $76) year over year. May marked the third consecutive month in which year-over-year growth was over 2%. The credit card delinquency rate for May was 1.43%, 27 basis points lower than pre-pandemic May 2019 levels.
The full report is available for download here .