Credit card spending on food and liquor up 10.8% over Christmas, but no sign of indulgent spending: CommSec

Commonwealth Bank credit card figures pre and post-Christmas confirm that consumers remain cautious with much of the 4.2% rise in spending on CBA credit card over the 11 weeks to January 4 2013 (compared with a year ago) the result of a rise in spending on food and liquor.

Credit card spending on staples (food and liquor) rose 10.8% on a year ago – partially underpinned by improving inflation in addition to increased volumes while spending on discretionary items underperformed the over retail sector, rising just 1.5% over the 11 week period.

The figure are based on transactions of more than three million CBA cardholders with CommSec economist Savanth Sebastian saying the results suggesting that consumers remain “relatively cautious despite the multiple rate cuts provided late last year”.

“In fact spending growth amongst domestic firms rose by just 4.2% in the 11 weeks to January 4 compared with a year ago. And given this is nominal spending rather real spending (inflation adjusted) it highlights the tough environment faced by the retail sector,” he says.

Sebastian says that given the buzz and interest around Christmas retail activity the lack of discretionary spending “really speaks volumes about how tough the retail sector is doing it at present and that is despite a healthy period of interest rate cuts”.

“It is important to realise that while confidence levels have been rising in the past couple of months it is of a low base and the current level of consumer caution will take some time to thaw.