ST. PETERSBURG, Fla.– Continued positive signs of reducing inflation--even with a marginal uptick in the CPI-U rate for July, along with improved consumer sentiment and ongoing resilience in purchasing growth for both credit and debit can be seen in the August edition of the PSCU Payments Index.
In addition to those findings, this month’s Payments Index “Deep Dive” also offers insights into the annual Amazon Prime Day sales event, along with competing events from Target and Walmart, with the analysis further highlighting generational differences are in the results for each of these retailers.
“Consumers continued to show resiliency in July, highlighted by steady purchase volumes and another successful Amazon Prime Day event. The success of the annual Prime Day event underscores the central role that Amazon plays in the lives of consumers and, given the growth we saw in this month’s performance, our credit unions have also been successful in having their cards in the wallets of their members,” said Tom Bennett, Manager, Advisors Plus Consulting at PSCU. “We’ll closely monitor the upcoming Amazon Prime Big Deal Days event in October, which has helped essentially add another month to the traditional holiday spending period over the past few years, especially against the backdrop of the inflationary environment.”
Key Takeaways
According to PSCU, some of the key takeaways from the August report include:
- Consumers remained resilient in July, with strong overall purchase volumes. Year-over-year growth in credit purchases was up 2.1%, while debit purchases grew 3.2%. Transaction growth continued to be stronger than growth in purchases, with credit and debit each up 4.7% in July.
- For credit and debit purchases, the largest contributor to growth in July was Restaurants, with Gasoline notably offsetting both credit and debit purchase growth.
- Shelter accounted for over 90% of the all-items inflationary increase. “It is anticipated that the Fed could raise interest rates one more time in 2023 if sufficient inflationary cooling does not continue,” PSCU said.
- Amazon held its annual Prime Day sale event on July 11-12. Purchase growth was up 9.0% for credit and 3.0% for debit for the seven-day period when the sale occurred. Walmart and Target each held competing sales during the same week in 2023 with differing results. Walmart posted growth in credit purchases of 4.5% and 7.4% in debit purchases, while purchase growth at Target was down 9.3% for credit and 5.1% for debit. Amazon also announced a “Prime Big Deal Days” sale for October 2023.
- The credit card delinquency rate increased again in July and finished at 2.08%, above the July 2019 pre-pandemic level by 29 basis points. Total credit card balances were up 12.6% for July compared to a year ago, while the average credit card balance for active accounts was $2,996, up 8.2% (or $227) year over year. Notably, as CUToday.info reported, Americans’ credit card debt levels have surpassed $1 trillion for the first time in history, according to data released earlier this month.
The full report is available for download here or can be shared as a PDF upon request.
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