Commonwealth Bank: Debit and credit card transaction value drops 0.3%

The latest Commonwealth Bank Business Sales Indicator has revealed that the transaction value of debit and credit cards reduced in June.

The transaction value of debit and credit cards has decreased by 0.3 per cent in trend terms, according to the latest Commonwealth Bank Business Sales Indicator (BSI).

The firm has revealed that there has been a decline in the amount of Aussie credit purchases processed through its point-of-sale terminals during June.

It is the fourth consecutive monthly drop, while in terms of annual growth the BSI slowed down to 0.7 per cent - its slowest pace in 17 months.

Symon Brewis-Weston, executive general manager of local business banking at the financial institution - which offers the Commonwealth Gold card - said the decline could be down to a consumer fear of interest rate rises, as well as the budget hit of increased utility charges and local council rates.

He added: "That said, underlying market fundamentals seem strong, with the job market improving and wages trending higher. This should lead to an upturn in sales towards the festive season."

Although, he stated that consumers could now be on the sidelines until next year.

However, spending was up for the service providers sector - an increase of 0.8 per cent in trend terms over June - which was the highest out of the 20 industries tracked in the BSI.

Australians continued to buy at the entertainment and amusement outlets also as this rose by 0.6 per cent, which adds substance to the view that consumers are spending on "little luxuries".

Craig James, chief economist of the Commonwealth bank's broking subsidiary CommSec and author of the BSI, noted that the latest trends cannot be ignored by the Reserve Bank of Australia - which maintained the official cash rate at 4.5 per cent at the beginning of the month.

He added: "The Reserve Bank would need solid justification from a higher inflation reading to lift rates in the next few months."

By Emma North