Cash-conscious Western Australians are being thwarted by the inflationary grinch ahead of Christmas, with Bankwest Spend Trends data highlighting volume declines in gift-giving sectors, but surges in transaction values.
Bankwest has tracked WA customer credit and debit transactions since the beginning of the pandemic and the subsequent recovery period to provide insights into the community response to changing economic conditions.
Western Australians’ spending behaviours were largely shielded from six months of rising cost-of-living and inflationary pressures, but began to tighten from October, with spending reigned in further in November.
The result was several gift-giving sectors – such as Clothing and Department Stores, and Electrical Appliance retailers – declining year-on-year in transaction and customer volumes just a month out from Christmas.
However, Western Australians’ efforts at reining in spending was thwarted by inflation, with the number of people transacting (1%) and the volume of those transactions (3%) stable year-on-year, while value (27%) surged.
The data indicated what Western Australians could expect to unwrap on Christmas Day, with month-on-month transaction volumes increasing for Clothing Stores (31%), Department Stores (25%), and Sports/Toy Stores (19%).
It was a different story year-on-year, though, with all three sectors falling in the number of customers transacting and the volume of transactions being made, indicating they were key gift-giving areas, but not to the extent of 2021.
There also appeared to be fewer gadgets and electrical goodies destined for a home under the Christmas tree.
Electronic Appliance retailers not only declined month-on-month in the number of customers transacting (-5%) and the volume of transactions (-6%), but also year-on-year, plunging 24 per cent and 29 per cent, respectively.
The results came despite the analysis period including the Black Friday and Cyber Monday sales.
The sector’s dependency on international supply chains, which expose it to inflation and Australian dollar impacts, could be driving declines, with spend value surging 36 per cent year-on-year, despite customer and volume drops.
Customers were potentially attempting to avoid in-store inflation by turning to online purchases, with month-on-month and year-on-year increases in the number of customers and transactions for Mail Order businesses.
The easing impact of COVID on supply-v-demand was also evident, from the travel industry to pharmacies.
The value of transactions at Pharmacies (5%) was outpaced by the number of customers transacting (8%), and the volume of transactions (10%), indicating COVID-related inflation (masks, sanitiser, RATs) could be softening.
It was a similar story for Airlines, with the number of customers (148%) and transactions (149%) surging year-on-year at a rate that was almost twice that of the value of those transactions (80%).
Bankwest General Manager Everyday Banking Philippa Costanzo said: “We’ve seen over the past three years how resilient and adaptive Western Australians are, and this data shows the community is again changing its behaviour.
“We’re in a period of economic uncertainty, with rising cost-of-living and inflationary pressures putting a strain on people’s hip pockets, so we’re seeing customers rein in spending volumes and prioritise purchase choices.
“The month-on-month data shows people have hit the shops in the lead-up to Christmas, but when we look at year-on-year figures, it’s clear they’re not doing so to the same degree as 2021, when financial pressures were far lower.
“The sectors that have a greater exposure to international factors, be that supply chains or the performance of the Australian dollar, appear more susceptible to inflation, soaring in spend value, despite falling in transaction volume.
“We expect a challenging financial environment to remain for some time to come, and we encourage any customers experiencing difficulties to get in touch with us as soon as possible so we can support them.”