A new report from Mastercard Inc said “rampant inflation” was hurting the spending habits of low-income customers, including travel purchases.
According to Reuters.com, the study found that cardholders are shifting their priorities from big-ticket items to essentials and groceries, but travel still remains a priority and helped the credit card company end a quarter solid.
Mastercard reported the strongest summer travel season since the start of the pandemic, thanks to pent-up demand and the easing of coronavirus restrictions. Cross-border volumes also jumped 58% in local currency in the second quarter, increasing dollar volumes on the company’s network by 14% to $2.1 trillion.
“In the United States, what you see is a downward trend in terms of the growth rate on the lower income side,” Mastercard Chief Financial Officer Sachin Mehra said in a quarterly conference call with investors.
While spending by high-income consumers and rising cross-border volumes will keep spending high for now, the company is eyeing the possibility of a recession after two quarters of contraction, a sign that travel spending could decline.
Credit card company Visa Inc told Reuters the company has yet to see signs of a drop in spending by its cardholders.
In June, location-based information provider PlaceIQ released new data revealing that Americans are back after two years of declining travel and visits to stores and restaurants.
However, US consumer spending in these categories is down overall from a year ago. The data suggests that the current inflation situation is to blame for trending consumer behavior, not pandemic-related factors like social distancing or stay-at-home warnings.
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