Save articles for later
Add articles to your saved list and come back to them any time.
High interest rates and inflation are starting to bite into online spending, with a new measure of internet shopping revealing a $124 million drop in turnover over the past year.
As traditional measures of spending also point to the growing difficulties facing the Reserve Bank, the Airwallex measure of digital expenditure confirms the impact of tight monetary policy and falling real wages on cash-strapped consumers.
There are signs from the digital economy that high interest rates and inflation are starting to dent consumer spending.Credit: iStock
Airwallex, a global payment platform started in Melbourne, processes almost $50 billion in transactions every year, many from emerging small and medium businesses.
The company’s digital economy index, released on Monday, shows a drop of almost 0.1 per cent in digital business turnover since the March quarter of last year, worth $124 million.
The largest decline in activity was in Western Australia, down 36 per cent, while Victoria was down 25.6 per cent. Activity was up almost 13 per cent in NSW and by 6.1 per cent in Queensland.
Much of the decline was due to falls in online purchases of clothes and products through e-commerce. This was offset by a lift in expenditure on travel and education courses.
Airwallex director of strategy for Australia and New Zealand, Amelia Hamer, said while a drop in online activity was expected after the surge during the early days of the COVID pandemic, there had been a definite slowdown in recent months.
“Online businesses are holding more strongly than other parts of the economy, but the data shows they aren’t immune from the economic headwinds the world is facing,” she said.
“The figures indicate the post-COVID economic recovery is patchy – in full swing across some areas while South Australia and WA, as well as Victoria, continue to struggle.”
More traditional measures of consumer activity also highlight the pressure facing consumers.
Westpac’s card tracker index, which measures activity through its network of debit and credit cards, softened through the first two weeks of April. Through the March quarter, the index was down 0.3 per cent.
Senior Westpac economist Matthew Hassan said while it was difficult to measure consumer activity through the Easter period, it appeared shoppers were starting to close their wallets.
“There are tentative signs of an underlying softening, but we will need to see the post-Easter rebound before this can be confirmed and quantified,” he said.
“While the pulse heading into June quarter is a little unclear, the evidence of a weak March quarter for the consumer is continuing to build.
“Card tracker figures for the quarter as a whole and a range of official indicators to February, including retail sales, now suggest spending stalled in nominal terms, a result that would imply a contraction in real terms.”
The Reserve Bank board meets on May 2, with financial markets putting the chance of interest rates being held steady for a second successive month at better than 90 per cent.
That’s despite last week’s stronger than expected March employment report that showed the jobless rate steady at 3.5 per cent, a 72,200 jump in the number of full-time workers and a record high participation rate.
Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.
Most Viewed in Politics
From our partners
Source: Read Full Article
