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Petrol hits 4-month low; ATM use at an 11-year low

Mon, 14 Apr 2014 21:40:58 +0000

Weekly petrol prices; Credit and debit card lending

Petrol prices down but price volatility difficult for retailers.

Petrol prices ease: According to the Australian Institute of Petroleum, the national average Australian price of petrol fell by 3.2 cents per litre to 149.1 cents a litre in the week to April 13 – a four month low.
The average credit card balance rebounded from a 4-year low in February, lifting by $58.70 (1.9 per cent) to $3,205.60. The average credit card balance was still 2.3 per cent below a year ago.
The number of ATM withdrawals hit the lowest levels in almost 11 years in February (lowest since June 2003), falling by 5.2 per cent to 57.3 million. The number of withdrawals is down 4.5 per cent on a year ago. The value of ATM withdrawals fell by 7.9 per cent in February to a 7-year low of $10.8 billion.

What does it all mean?

The volatility in petrol prices across capital cities doesn’t appear to be helping anyone, just confusing motorists and making life difficult for retailers. The good news is that pump prices fell to four-month lows last week and, thanks to the recent resurgence of the Australian dollar, it should hold steady around these levels.
However the volatility of the discounting cycle is unfortunate for motorists in capital cities like Sydney, Melbourne and Brisbane as it likely to result in higher prices over the Easter Holiday period. Given the vagaries of the discounting cycle, petrol prices are likely to lift to peak levels in the next couple of days, and effectively hold at the higher levels over the Easter long weekend. If there is some consolation it is that the low point in the cycle is likely to be around mid-next week – in time for the Anzac day long weekend.
The average Australian uses plastic to make their purchases almost 18 times a month, a 50 per cent increase over the past decade. While we are still using our credit cards more often than debit cards (10 times a month compared with around 7 times), the gap is closing. At the same time, fewer Aussies are taking less cash out of automatic telling machines. In fact ATM withdrawals have hit the lowest levels in almost 11 years in February, a trend that has been in place for more than a year.
Aussies are showing no sign of ditching their new-found virtue of financial conservatism. Credit card debt is subdued, fees are being avoided and consumers are more likely to use technology to make price comparisons before parting with their hard-earned money. While we are using our credit cards more often, we are paying off the debt, with the average balance down by over 2 per cent on a year ago.
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 3.2 cents a litre to 149.1 c/l in the week to April 13. The metropolitan price fell by 4.3 c/l to 146.0 c/l, while the regional average price fell by 1.1 c/l to 155.4 c/l.
Average unleaded petrol prices across states and territories over the past week were: Sydney (fell by 3.6 cents to 145.5 c/l), Melbourne (down by 5.5 cents to 142.1 c/l), Brisbane (down by 6.4 cents to 146.0 c/l), Adelaide (down 5.6 cents to 143.7 c/l), Perth (down 0.6 cents to 151.5 c/l), Darwin (unchanged at 173.0 c/l), Canberra (down 0.1 cents to 157.6 c/l) and Hobart (down 0.1 cents to 160.8 c/l).
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 142.2 c/l, up around 0.6 cents over the week.
Last week the key Singapore unleaded petrol price rose by US$2.50 (2.1 per cent) to US$121.40 a barrel. In Australian dollar terms the Singapore gasoline price rose by 19 cents or 0.2 per cent last week to $128.96 a barrel or 81.10 cents a litre.
Figures from MotorMouth show that petrol prices in Sydney, Melbourne, Brisbane and Adelaide eased to the low point over the weekend. Prices are likely to ratchet higher in the next couple of days, reflecting the usual discounting cycle. Based on a gross retail margin around 9 cents a litre, the national petrol price should hold around $1.50 a litre.

What do the figures show?

Credit & debit card lending:

Figures released from the Reserve Bank show that the average credit card balance rebounded from a 4-year low in February, lifting by $58.70 (1.9 per cent) to $3,205.60. The average credit card balance was still 2.3 per cent below a year ago. In smoothed terms (12 month average) the average balance was down by 2.6 per cent, unchanged on January but slightly down from the 2.7 per cent fall recorded in November (the biggest fall in 19 years of records).
Of credit cards attracting interest charges, the average outstanding balance rose by $1.40 in February to $2,246.90. The average balance accruing interest is down by 4.6 per cent on a year ago. In smoothed terms (12 month average) the average balance was down by a record 5.5 per cent.
The average credit card limit fell by 30 cents to $9,126.60 in February. The average credit card limit rose by just 0.3 per cent in the year to February.
The average number of transactions on credit cards in February was 9.8, down from 10.6 in January and 12.5 in December due to seasonal reasons. In smoothed terms the average number of credit card transactions was 10.44 in February – a record high. The average purchase on a credit card was $136.72 in smoothed terms (average for the year to February).
The average number of transactions on debit cards in February was 7.1, down from 7.7 in January and 8.7 in December due to seasonal reasons. In smoothed terms the average number of credit card transactions was 7.69 in February – a record high. The average purchase on a debit card is $55.62.
The number of credit card cash advances fell by 8.0 per cent in February (value down by 1.0 per cent). In smoothed terms, credit card advances are down 1.0 per cent on a year ago and have consistently fallen in the past five years.
The number of ATM withdrawals hit the lowest levels in almost 11 years in February (lowest since June 2003), falling by 5.2 per cent to 57.3 million. The number of withdrawals is down 4.5 per cent on a year ago. The value of ATM withdrawals fell by 7.9 per cent in February to a 7-year low of $10.8 billion, The value of withdrawals is down 1.8 per cent on a year ago..
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 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.

What are the implications?

The Reserve Bank will be encouraged by consumer conservatism. If debt levels are cut and price comparisons are regularly made when shopping, then inflation has scope to stay lower for longer, as do interest rate settings.

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Credit/debit card fees at record lows

Tue, 12 Nov 2013 20:40:29 +0000

Credit & debit cards

Credit card debt falls.

Record fall in credit card debt. The average credit card balance fell by 2.7 per cent in smoothed terms in the year to September, the biggest drop in 19 years of records. Use of credit card limits is at 11½ year lows. Usage of credit and debit cards is at record highs. Average fees on MasterCard or Visa purchases have hit record lows.

What does it all mean?

The best way of indicating what the latest cards data means is by first stating the facts:

The average credit card balance is at four-year lows.
Usage of credit card limits is at 11½ year lows.
Consumers are using cash less often – withdrawals from ATMs are down on a year ago.
The average credit or debit card transaction is around $85.00.
But credit and debit cards are being used more often – in smoothed terms, at record levels.
The average fee on a MasterCard or Visa transaction has hit record lows

Aussies are still shopping, but they aren’t keen on going into debt to buy goods. In short, Aussies are living within their means. And that suggests that the Reserve Bank can keep rates lower for longer. It also means that retailers need to keep prices down to entice consumers to buy.

The transformation of the Aussie consumers continues and represents just another form of disruption (game-changer) for Aussie businesses together with technology, China, the Aussie dollar and shifting home preferences.

What do the figures show?

Credit & debit card lending:

Figures released from the Reserve Bank show that the average credit card balance fell by $10.10 (0.3 per cent) in September to $3,162.60 – the lowest result in almost 4 years (since October 2009). The average credit card balance was 2.7 per cent below a year ago. In smoothed terms (12 month average) the average balance was down by 2.7 per cent – the biggest fall in 19 years of records.
Of credit cards attracting interest charges, the average outstanding balance fell by $3.50 in September to $2,217.90. The average balance accruing interest is down by 4.4 per cent on a year ago and down by a record 4.9 per cent on a year ago in smoothed terms.
The average credit card limit rose by $7.40 to $9,102 in September. The average credit card limit rose by just 1.5 per cent in the year to September. Credit card holders, on average, used only 34.7 per cent of credit card limits in August – the lowest rate in 11½ years (since December 2001).
The average number of transactions on credit cards in September was 10.5, up from 10.2 in August. In smoothed terms the average number of credit card transactions was 10.38 in September – a record high.
The average number of transactions on debit cards in September was 7.6, down from 7.9 in August. In smoothed terms the average number of credit card transactions was 7.50 in September – a record high.
The number of credit card cash advances rose by 4.4 per cent in September after slumping by 9.5 per cent in August (value up by 0.2 per cent). In smoothed terms, credit card advances are down 1.1 per cent on a year ago and have consistently fallen in the past five years.
The number of ATM withdrawals in September was down by 5.4 per cent on a year ago. In smoothed terms, ATM withdrawals were down by 3.4 per cent on a year ago and they have fallen consistently over the past year.
The average fee on a MasterCard or Visa purchase was 0.81 per cent of the purchase price in the September quarter – a record low.
The average fee on an EFTPOS transaction was 16.38c in the September quarter, down 1.9 per cent on a year ago.
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.
Financial institutions will continue to find it hard to make money from credit cards. Average fees on MasterCard or Visa purchases have hit record lows. The good news is that the conservative posture of consumers may lead to fewer people running into problems with credit card debt.
Retailers need to offer a variety of payment sources to accommodate more flexible consumers. The downward pressure on prices and margins continues.

Why is the data important?

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.

What are the implications?

Financial institutions will continue to find it hard to make money from credit cards. Average fees on MasterCard or Visa purchases have hit record lows. The good news is that the conservative posture of consumers may lead to fewer people running into problems with credit card debt.
Retailers need to offer a variety of payment sources to accommodate more flexible consumers. The downward pressure on prices and margins continues.

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Record fall in credit card debt

Wed, 16 Jan 2013 20:30:04 +0000

If the Reserve Bank cuts interest rates again, would the impact be positive on the economy? It is an interesting question and one that the Reserve Bank probably didn’t think that it would ever need to contemplate.

But Aussie consumers are shunning debt, even with historically low interest rates. And with the value of term and other deposits exceeding the value of owner-occupier home loans, a rate cut may cause more disappointment by investors than joy by borrowers.

Aussie consumers continue to pare back debt at a record rate. In fact data from the Commonwealth Bank indicates that 60 per cent of credit card customers now pay off their outstanding debt in full by the due date, avoiding charges.

Consumers are living within their means and prefer to use their own money to make purchases than put it on credit. It is possible that if interest rates were slashed over 2013 that consumers would become more fearful than confident, perhaps cutting debt by an even greater magnitude.

The home loan data covers the month of November but given that so much has happened since, the data is probably more in the realm of ancient history. The Reserve Bank cut interest rates in December and the mood has become decidedly more upbeat in the early weeks of 2013.

Figures released from the Reserve Bank show that the average credit card balance recorded a seasonal increase in November (first increase in five months), lifting by $27.10 (0.8 per cent) to $3,262.60. The result follows a $14.80 (0.5 per cent) fall in October, $11.70 (0.4 per cent) decline in September, $35.90 (1.1 per cent) decline in August and $70.10 (2.1 per cent) fall in July.

The average credit card balance is down a record 2.3 per cent on a year earlier and is thus continuing to fall in real terms.
In smoothed terms (12-month average) the average credit card balance is up 0.3 per cent on a year ago – the slowest growth on record.
The number of credit card accounts rose by just 1.3 per cent over the year to November to 15.18 million. The number of credit card accounts without an interest-free period hit a record low of 320,000 in November, down 5.9 per cent over the year. The number of debit cards rose by 6.6 per cent in the year to November to 36.00 million.
Of credit cards attracting interest charges, the average outstanding balance fell by $39.60 to $2,321.90. The average balance accruing interest is down 4.2 per cent on a year ago. In smoothed terms (12-month average) the average credit card balance accruing interest is down 0.8 per cent on a year ago – the slowest growth on record.
The average credit card limit fell by $8.30 to $9,144.90 in November. The average credit card limit rose by just 1.7 per cent in the year to November – the slowest growth in 18 years.
The number of credit card cash advances fell by 7.4 per cent in November after surprisingly rising by 16.5 per cent in October (value fell by 6.4 per cent after a 14.1 per cent lift in October). In smoothed terms, credit card advances are down 4.9 per cent on a year ago and have consistently fallen in the past five years.
Purchases made with credit cards fell by 3.5 per cent in November after rising by 17.1 per cent in October and slumping by 8.1 per cent in September. In smoothed annual terms credit card purchases were up 4.9 per cent on a year ago. Purchases made with debit cards were up 17.3 per cent on a year ago (in smoothed terms up 16.6 per cent).
Cash-out only transactions with debit cards were up by a record 45.1 per cent on a year earlier in November after a 40.7 per cent annual gain to October.

What are the implications for interest rates and investors?
We believe that the Reserve Bank will leave interest rate settings on hold in the next few months to determine the impact of the December rate cut and lift in the mood on financial markets in early 2013.

Consumers continue to cut credit card debt, preferring to use their own funds instead to make purchases. Banks, retailers and consumer-focused businesses more generally need to work through the implications.

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