Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Invest

Consumer spending defies lockdown

  • July 08 2021
  • Share

Invest

Consumer spending defies lockdown

By Cameron Micallef
July 08 2021

Statewide lockdowns have not hampered consumer spending, with the latest government data showing Aussies are continuing to spend more on their credit cards. 

Consumer spending defies lockdown

Consumer spending defies lockdown

author image
  • July 08 2021
  • Share

Statewide lockdowns have not hampered consumer spending, with the latest government data showing Aussies are continuing to spend more on their credit cards. 

Consumer spending defies lockdown

Data released by the Reserve Bank of Australia (RBA) showed that credit card spending has increased  slightly month-on-month in May, adding close to $100 million in credit card interest. 

The 0.5 per cent increase in spending has taken the total credit card debt of the nation to $20.06 billion.

However, with recent lockdowns, credit card usage is tipped to increase. 

The RBA already stated that the data points to higher spending, with the value of purchases rising by 1.77 per cent in May.

While paying down credit card debt is becoming harder, fewer people are taking out credit cards with a drop of more than 856,000 credit card accounts in May compared with the same time last year.

Advertisement
Advertisement

Credit providers record increasing sales

According to Australia’s largest bank, spending has been less impacted by the current COVID-19 restrictions in NSW than it was during Victoria’s lockdown.

Commonwealth Bank said card spending in NSW in the week ending 2 July dropped only 1.2 percentage points on the prior week, compared with the 21 percentage point fall seen during the first week of Victoria’s most recent lockdown starting 28 May.

Nationwide household credit and debit card spending also remains solid, tracking 16.5 per cent above 2019 levels and up from 13.9 per cent the previous week, despite four states being in various stages of lockdown.

CBA senior economist Belinda Allen highlighted that it was surprising how little impact lockdowns have had on consumer spending.

“What this data shows is that the type of lockdown matters for spending as does the community response,” she said.

Although the lockdown, which covers 70 per cent of the NSW population, is impacting certain businesses.

“The sharpest falls in spending in NSW have been clothing and footwear, general retail, personal care, transport and, of course, eating and drinking out. Similar to previous lockdowns, there was a lift in spend on household furnishings and equipment,” Ms Allen explained.

The economist pointed out how reopening economies leads to greater consumer spending post-lockdowns.

“Card spending in Victoria lifted to 20.1 per cent on 2019 levels, the strongest growth since the week ending 21 May. The severity of this recent lockdown compared to other states explains the sharper response in card spending, and it is encouraging to see spending momentum resume its previous trend,” she continued.

According to CBA, the current bumper credit levels are tipped to continue to track higher this year, with spending supported by low interest rates, a strong labour market, a booming housing market and a decline in the savings rate.

However Ms Allen opined, “Recent outbreaks and restrictions will be a headwind for consumer spending, particularly over July, with services spend impacted.”

Consumer spending defies lockdown
Consumer spending defies lockdown
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

more on this topic

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.