Bankwest’s latest Spend Trends analysis for October has revealed that Western Australian spending has all but stalled, as cost-of-living and inflationary pressures appear to be finally restricting consumers.
Bankwest 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.
Previous reports showed a reluctance from WA consumers to rein in spending in discretionary sectors, despite rising inflation being apparent in the volume and value of transactions being made.
That inflation could be seen in the year-on-year data, with a significant outpacing of the value of spending (+25%) compared to the number of customers spending (+4%), and the volume of transactions (+6%).
However, the analysis for October showed a complete reversal of recent trends, with the number of customers, average total spend, and total volume of transactions all stabilising at one per cent growth month-on-month.
Key areas in which West Australians pulled back were travel – with Airlines, Auto Rental, Hotel/Motel, and Travel Agencies all stagnant or declining month-on-month – Clothing and Department Stores, and Restaurants and Bars.
West Australians also began responding to the ongoing price pinch of petrol by pulling back at the bowser, with the number of customers transacting (-4%) and the volume of transactions (-2%) contracting from September.
However, the return of the fuel excise levy at the end of September, which added about 25.3c a litre to the cost of petrol and diesel, coupled with existing high prices, resulted in the value of transactions rising (2%).
The cost-of-living pressures also appeared to be creating a ‘repair instead of replace’ mentality, with Repair Shops, which include device, machine, watch, and footwear repairers, increasing in transactions month-on-month.
The rise coincided with a fall in the number of customers spending (-2%) and the volume of transactions (-3%) at Electrical Appliance retailers, further supporting West Australians embracing ‘repair instead of replace’.
The analysis also revealed an interesting trend across Discount and Hardware stores, as both rose in customers, spend, and volume month-on-month, which could be attributed to retailers beginning Christmas decoration sales.
Figures from the Federal Chamber of Automotive Industries showed WA’s October car sales up year-on-year, and Bankwest’s Spend Trends data supported that in average total spend, month-on-month (5%) and year-on-year (8%).
Bankwest General Manager Everyday Banking Philippa Costanzo said: “We know Western Australians are in a period of economic uncertainty, but until recently, there was a reluctance to rein in discretionary spending.
“Bankwest data from May this year showed more than 90 per cent of home loan customers were ahead on their repayments by about three years, while savings balances across all financial institutions increased through COVID.
“That enabled many people to build a financial buffer that protected them from the rising cost-of-living and inflationary headwinds, and there was little evidence of an urgency in the community to alter spending behaviours.
“However, these latest Spend Trends figures suggest the reality of the current economic climate is becoming more apparent to Western Australians, with discretionary spend reined in, and purchases becoming more specific.
“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."