Sydney, News South Wales, Australia (PRWEB) November 30, 2012
Creditcard.com.au has identified an underlying credit trend that has increased the likelihood of a disappointing Christmas and January sales season for Australia’s retail sector.
“We are seeing heightened debt consolidation activity from the thousands of credit seekers visiting our site over the past four weeks,” says creditcard.com.au founder Roland B Bleyer.
Bleyer points to a number of factors that make a Christmas retail bonanza unlikely:
- mixed signals about the level of Australian consumer spending
- shrinking appetite for consumer credit
- uncertainty about an early December interest rate cut by the Reserve Bank of Australia
Mixed signals on consumer spending: In spite of three interest rate cuts since May, the Commonwealth Bank's Business Sales Indicator reveals Australian consumers are not spending any more than they were five months ago. The BSI data showed the trend since mid-year had been virtually flat, with any monthly gains exactly offset by losses. The CBA said this is “creating inconsistent and challenging operating conditions for businesses”.
Bleyer pointed out that “BSI data tracks the value of credit and debit card transactions processed only through Commonwealth Bank point-of-sale terminals. However, we can see that trend is being reinforced across the 25 major banks and credit unions who are providers on creditcard.com.au.”
Shrinking appetite for consumer credit:
“The main area of enquiry during October and November has been for credit cards offering the best balance transfer deals. The goal has been to minimise the annual hangover they know is going to hit them after the Christmas blow out and the January sales splurge,” Bleyer said.
The shrinking appetite for credit is a trend first spotted by creditcard.com.au in its early September national poll of nearly 4,000 credit seekers. More than a third said they were facing greater financial strain than last year. Almost a quarter said they planned to check out a Christmas shopping guide to help plan their holiday spend.
December interest rate cut?
Two question marks hang over the Reserve Bank of Australia’s meeting next Tuesday, 4 December. Will the RBA follow many analyst predictions and cut the bank’s base rate by 25 per cent.? If so, how much of it will the banks and credit unions pass on to the nation’s borrowers?
The minutes from this month’s RBA meeting revealed the Board felt further interest rate easing might be required over time. The Board was also conscious, though, that a significant easing of policy had already been put in place.
Just last week, RBA Governor Glenn Stevens told an Australian business audience: “The effects of which are still coming through and would be for a while. In addition, the latest inflation data, while not a major problem, were a bit on the high side, and the gloom internationally had lifted just a little. So it seemed prudent to sit still for the moment.”
Bleyer’s view: “I don’t believe next week’s decision by the RBA will make much difference either way to the trends we are witnessing now. creditcard.com.au has been monitoring the watchful sentiment adopted by credit seekers and clearly it has now got a momentum that won’t be easily diverted.
“Another interest rate cut, if it happens, will be too late to greatly affect consumer spending behaviour this Christmas and January sales season,” said Bleyer.