Debit card purchases at 6-year highsCredit & debit card lending; Weekly petrol
Credit cards: The average credit card balance fell by $83.80 to $3,086.6 in January – the lowest level in three months. Seasonal effects partly contributed to the average balance declining by 2.6 per cent over the month of January – the equal largest decline in 2½ years. The average balance was up just 0.1 per cent over the year to January.
Debit card purchases surge: In smoothed terms (12 month average) debit card purchases rose by 15.5 per cent in January, the strongest growth rate in over six years.
Petrol: Due to the public holiday in Canberra, the Australian Institute of Petroleum has not released the national average Australian price of unleaded petrol in the past week. Today, the national average wholesale (terminal gate) unleaded petrol price stands at 123.4 cents a litre, down by 0.4 cents over the week. The terminal gate diesel price stands at 124.2 cents a litre, up by 0.2 cents over the past week. The petrol figures have implications for retailers, especially petrol marketing groups. Credit card data is important for the retail and financial sectors.
What does it all mean?
After a Christmas spending splurge, Aussies were more restrained with their spending in January. While largely a seasonal phenomenon, the average credit card balance fell to the lowest level in three months. And the percentage monthly decline of 2.6 per cent in January was the equal largest fall in 2½ years.
According to the Reserve Bank, total credit card purchases and balances also declined to $26.5 billion (from $27.9 billion) and $51.6 billion (from $52.9 billion), respectively in January.
And our love affair with debit cards continues. Aussies are continuing to prefer debit cards to pay for goods and services.
In this environment of modest wages growth, exercising greater control over discretionary  spending knowing that it can be afforded now – rather than in the future – provides consumers with greater peace of mind.
The convenience is also attractive. For example, BankWest has just released its ‘Halo’ ring which works exactly the same as a contactless debit card. The ‘Halo’ allows customers the freedom of not carrying your wallet, phone or card to make payments.
Global oil prices rose last week. Brent crude oil prices rose by 1.7 per cent to US$65.49 a barrel and the US Nymex price increased by 1.3 per cent to US$62.04 a barrel. Data revealing the first weekly decline (-4) in seven weeks in the number of active US oil rigs (796) contributed to the rise in prices.
The benchmark Singapore gasoline price fell to 16-week lows, reducing the majority of Aussie capital city retail pump prices last week. Adelaide motorists were the biggest beneficiaries with prices falling by almost 15 cents per litre.
Sydneysiders weren’t so lucky. Prices rose by nearly 9 cents last week to 134.4 cents per litre, the highest level in 14 weeks as the price discounting cycle ended abruptly over the weekend.
What do the figures show?Credit & debit card lending:
The average credit card balance fell by $83.80 to $3,086.6 in January – the lowest level in three months. Seasonal effects partly contributed to the average balance declining by 2.6 per cent over the month of January – the equal largest decline in 2½ years. The average balance was up just 0.1 per cent over the year to January. In smoothed terms (12 month average) the average balance was down by 0.2 per cent.
Of credit cards attracting interest charges, the average outstanding balance rose by $47.50 in January to 8-month highs of $1,950.80. The average balance accruing interest was down by 0.9 per cent on a year ago. In smoothed terms (12 month average) the average balance was down by 1.8 per cent on a year ago.
The average credit card limit rose by $12.10 to $9,161.00 in January to be up 1.0 per cent over the year.
Usage of credit card limits stood at 33.7 per cent in January – the lowest level in three months.
The number of credit card accounts stood at 16.711 million in January; up 0.1 per cent over the year.
The number of debit card accounts stood at a record high of 46.804 million in January; up by 4.6 per cent over the year.
The number of ATM transactions in January were down 3.0 per cent over the year. Transactions have been consistently falling in annual terms for over five years.
The number of debit card purchases in January were 17.9 per cent higher than a year ago with the value up 14.0 per cent.
In January 14.7 transactions were made on credit cards (on average) with a record 10.8 transactions made on debit cards.
Petrol prices
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 123.4 cents a litre, down by 0.4 cents over the week. The terminal gate diesel price stands at 124.2 cents a litre, up by 0.2 cents over the past week.
Last week the key Singapore gasoline price fell by US60 cents or 0.8 per cent to 16-week lows of US$74.40 a barrel. In Australian dollar terms the Singapore gasoline price last week fell by US$1.22 or 1.3 per cent to $95.48 a barrel or 57.58 cents a litre – the lowest level in four months.
MotorMouth records the following average retail prices for capital cities today: Sydney 134.4c; Melbourne 128.5c; Brisbane 133.6c; Adelaide 131.1c; Perth 125.8c; Canberra 147.9c; Darwin 148.3c; Hobart 146.7c.
What is the importance of the economic data?
The Reserve Bank releases data on credit and debit card transactions each month. The credit card figures are useful in highlighting consumer borrowing and spending trends.
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
What are the implications for interest rates and investors?
Petrol prices have eased in most capital cities – especially in Adelaide. However, global crude oil prices are rising again as Korean geo-political risks recede and record US production takes a breather. It might be time to fill-up now.
Sydney retail fuel prices are increasing following the end of the most recent price discounting cycle. Motorists are encouraged to check the NSW Fuel Check, myNRMA, MotorMouth and GasBuddy smartphone apps for the cheapest prices at local petrol stations.
Aussies remain a frugal bunch, taking firmer control of their finances by using debit rather than credit cards. Also the post-Christmas spending splurge hangover may have set in.
Still, debit and credit card payments are continuing to rise globally according to the Bank of International Settlements (BIS). In its latest quarterly report, the BIS said that: “Payments [credit and debit card] have increased from 13 per cent of GDP in 2000 to 25 per cent in 2016. People are holding more cards and are using them for more and smaller transactions”.
CommSec expects interest rates to be unchanged until at least the December quarter.
Published Ryan Felsman, Senior Economist, CommSec