Consumer spending shifts from savings to credit as inflation bites
Visa's index of domestic spending flags a new front of economic pressure as non-discretionary spending grows and use of credit cards increases at the expense of debit.
Australians are shifting their spending from debit cards to credit cards as cost-of-living pressures and a run-down of savings pressures the economy.
That is the view of Visa's global chief economist Wayne Best, who spoke to Capital Brief on a visit to Australia last week. Visa’s latest Australian Spending Momentum Index (SMI) had topped 100 for the first time this year but Best didn’t see the reading as an inflection point because it was more driven by credit.
“I think what we’re seeing is those (savings) cushions being used up and the higher spending is capturing the higher cost of non-discretionary items,” he said.
The September SMI improved 5.7 points to 100.5 in August as a larger share of Australians increased their spending compared with a year ago.
