June credit spending increases 8.8%: report

The amount of money spent at US merchant locations increased by 8.8% in June, compared with the prior year, according to First Data Corp.’s SpendTrend analysis for the month. The report measured credit, signature debit, PIN debit, EBT cards and checks spending.

“Inflation and costs are going up across the board,” said Susan Fahy, VP of global information and analytics solutions at First Data. “Merchants are starting to pass costs on to the consumer.”

Average ticket growth, found by dividing total transaction volume by the number of transactions, was 2.1%, the largest year-over-year increase in the past year. Average transaction value was $52.91, up more than $1 compared with last year’s average of $51.81.

“Spending is going up, and people can’t afford to meet those prices,” added Fahy. “Credit payments have soared in dollar volume, and more consumers are using credit cards on everyday items.”

Fahy said there are two types of credit consumers. One group includes affluent consumers who continue to use credit cards but pay off their balance in full each month, while the other is made of consumers who use credit to “make ends meet.”

“Prior to the recession, credit was a lot more accessible,” she said. “Credit growth spending is a tale of two stories. People have money and are spending it, but on the flip side, consumers are using credit to pay for everyday items like groceries and gasoline.”

All industries witnessed growth compared with June 2010.

Spending growth at gas stations increased the most of any sector, year-over-year, at 31.2%. Food and beverage saw 4.3% growth, while food service grew 9%, and retail saw a 7.4% increase. Services were up 9.5%, while spending on travel increased 7.7%.

Each of these industries also saw a growth increase compared with May’s percentage increase, as well.

The hotel industry was the only sector to witness dollar volume growth decrease from an 11.5% increase from May 2010 to May 2011 to a 7.6% increase from June 2010 to June 2011.

Despite the slip, June’s year-over-year growth for hotels was the second largest in the past five months. Average ticket growth at hotels in June was 4.6%, the highest year-over-year growth for the category in more than a year. “Business travel slowed and prices rose,” explained Fahy.

“We believe that businesses have pulled back on business travel, which caused growth to slow from May to June,” said Fahy. “The hotel industry did perform well year-over-year with dollar volume growth of 7.6%.”

Credit card payments surpassed all other payment categories for the second consecutive month. Credit card dollar volume growth was 10.7% in June, the largest increase in 13 months.

Signature debit dollar volume growth increased 8.5%, PIN debit increased 6%, and check payments decreased 12.6%.

SpendTrend analysis is based on normalized point-of-sale activity from First Data’s proprietary systems. Data includes only card-based payments.

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