PSCU: Inflation Helps Boost Member Spending in June

The gains in the amount spent far outpace gains in the number of transactions.

PSCU reported Tuesday that the value of purchases it handles for affiliated credit unions rose much faster than the number of transactions in June, which it said indicated inflation was a growing factor in purchasing growth.

The St. Petersburg, Fla., payments CUSO found members whose credit unions use PSCU services spent 16% more by credit cards in value and 12% more in the number of transactions in June than they did in June 2021. By debit, they spent 7% more by value and 3% more by number.

“While overall consumer spending remained strong throughout June, current inflationary pressures are keeping growth in purchases outpacing growth in transactions,” Brian Scott, PSCU’s chief growth officer, said.

The U.S. Bureau of Labor Statistics reported July 13 that inflation rose a seasonally adjusted 1.3% from May to June, and rose 9.1% from June 2021 to June 2022 — the largest 12-month gain since November 1981.

“With another record Consumer Price Index increase announced this month, the Federal Reserve is under continued significant pressure to tame soaring inflation,” Scott said.

Overall spending by credit union members served through PSCU seemed to trend higher that retail spending among all U.S. consumers.

The U.S. Census Bureau reported July 15 that retail spending — excluding automobiles, auto parts and gasoline — rose 7% from June 2021 to June 2022. The seasonally adjusted increase from May to June was 0.7%.

In particular categories, the 12-month gains reported by PSCU bracketed those reported by Census:

  • Grocery spending rose 8.9% from June 2021 to June 2022, according to the Census Bureau. PSCU reported a purchase gain of 15% by credit and 5% by debit. Transactions rose 11% by credit and 2% by debit.
  • Gasoline spending rose 49.9%, according to the Census Bureau. PSCU reported purchase gains of 59% by credit and 35% by debit. Transactions rose 15% by credit and 5% by debit.
  • Restaurant spending rose 13.7%, according to the Census Bureau. PSCU reported purchase gains of 20% by credit and 6% by debit. Transactions rose 16% by credit and 2% by debit.

PSCU’s July Payments Index found the average credit card balance for June 2022 was $2,733, up 3.5% or $93 from June 2021. June marked the fourth consecutive month in which year-over-year growth was over 2%.

PSCU’s numbers reflected the national pattern for both credit unions and banks. Credit card balances dwindled after COVID-19 was declared a pandemic in March 2020, and had remained below the February 2020 mark for more than two years.

However, balances have been rising this year. The Fed’s G-19 Consumer Credit Report released July 8 showed May balances at both banks and credit unions had finally exceeded their February 2020 levels. NAFCU Chief Economist Curt Long said then that high inflation is one reason he expects credit card balances to grow quickly through the rest of the year.

The credit card delinquency rate for June was 1.54%, 20 basis points lower than pre-pandemic June 2019 levels.

PSCU’s report was based on data from credit unions that have been processing payments with PSCU since January 2020. It encompassed 2.8 billion transactions valued at $140 billion of credit and debit card activity in the 12 months ending June 30.

Courtesy of Jim DuPlessis, Credit Union Times