April 22, 2022 – Today, PSCU – the nation’s premier payments credit union service organization (CUSO) – published the April edition of the PSCU Payments Index, the goal of which is to provide information and insights to help financial institutions make informed, strategic decisions on the road ahead.
In this month’s iteration, we look at the Labor Department’s April 12 update, which notes the Consumer Price Index (CPI) increased to 8.5% in March, a 1.2% seasonally adjusted increase. It is the sixth straight month above 6% and the fastest pace of inflation since 1981. Sectors leading the increases included Gasoline, Shelter and Food, with Gasoline accounting for over half of the total increase. It has now been two months since Russia’s invasion of Ukraine, leading to multiple waves of sanctions against Russia, including the United States banning the import of Russian oil. This ban further exacerbates rising gas prices that began with a strong economic recovery coupled with low investment in oil production. In this with this, we take a deeper look into the Gasoline sector this month.
The Consumer Confidence Index rebounded slightly in March after declines in January and February. In addition, we saw the continued shift in growth rates with strong consumer spending on credit card purchases up 22% over 2021, and positive growth rate in debit card purchases at 1%.
“Strong consumer spending growth remained throughout the month of March 2022, with softer debit performance skewed by the third round of economic impact payments issued in March 2021,” said Mike Bell, vice president, Insights, PSCU. “This month’s Consumer Price Index reflected the largest 12-month increase in 40 years, with the effect of higher gasoline costs accounting for half of the increase as the world grapples with the effects of geopolitical conflict and, domestically, travel and entertainment activities return to pre-pandemic levels. In this month’s Deep Dive, we explore the Gasoline sector beyond the price increases to identify potential changes in demand. Entertainment led all sectors in March for top growth in both credit and debit purchases, with Gasoline and Travel rounding out the top three.”
A sampling of key takeaways from the April report includes:
- The Consumer Price Index (CPI-U) for March increased to 8.5% – a 1.2% seasonally adjusted increase and the fastest rate of inflation in 40 years. In March, the Fed increased interest rates by a quarter-point and there is market anticipation of back-to-back half-point increases for April and May.
- Gasoline prices hit a 14-year high in March at $4.32 per gallon, a 49% increase from March 2021. While year-over-year Automated Fuel Dispenser (AFD) gas purchases were up 65% for credit and 43% for debit, the estimated quantity of gasoline purchased was up 10% on credit cards and down 4% on debit cards.
- Consumer spending remains strong, with credit purchases up 22% and debit purchases up 1% year over year. Contributing to the markedly lower growth in debit was exceptional spend in 2021 that included the third economic stimulus payment. The Entertainment sector posted top growth rates for credit and debit purchases in March, with Gasoline and Travel rounding out the top three growth sectors for credit and debit purchases.
- For debit cards, the growth in transactions exceeded the growth in purchase volume, resulting in the first decrease in debit card average purchase in the past two years. For March, the average debit purchase was $47.11, down 1.5% or $0.74 compared to March 2021. The March 2022 average credit card purchase was up 4.6% year over year, hitting a new PSCU Payments Index high at $74.46.
- The credit card delinquency rate for March was 1.38%, which was 36 basis points lower than the pre-pandemic level of March 2019. The last month when the difference to the pre-COVID delinquency rate was 36 basis points was August 2020.
The full report is available for download here or can be shared as a PDF upon request. Additionally, feel free to subscribe here to receive updates when the PSCU Payments Index is published each month.
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