ST. PETERSBURG, Fla.– Even as consumer sentiment and confidence continued to see erosion, consumer purchasing behavior remained positive in April, with increased growth in debit activity and ongoing consistent growth in credit activity, according to the May edition of the Velera Payments Index.
The new Index also includes a deep dive into digital payments.
“Consumer goods led the charge, perhaps signaling early purchasing ahead of expected tariff impacts,” said Velera, adding its May Payments Index revisits the consumer card payment ecosystem with a focus on digital payments.
Velera reported its Consumer Confidence Index posted “another substantive decline” for April, dropping 7.9 points to 86.0.
‘Deteriorated Sharply’
“The three expectation components – business conditions, employment prospects and future income – all deteriorated sharply, reflecting pervasive pessimism about the future,” Stephanie Guichard, senior economist, Global Indicators at The Conference Board, said in a statement as part of the report.
The report further notes the decline was across all age groups and most income levels. The University of Michigan Index of Consumer Sentiment dropped 8% from March to 52.2 in April. There was a much larger drop-off in the Index of Consumer Expectations, with the area of personal finance and business conditions dropping 32% since January. Weaker income growth in the year ahead was cited by consumers, which can lead to a slowdown in spending, the Payments Index states.
The company noted that in the Labor Department’s May 13 update, the Consumer Price Index (CPI) increased 0.2% in April, bringing the cumulative 12-month rate of inflation up to 2.3%.
Key Takeaways
Key takeaways for April from the Velera data include:
- Growth rates improved for debit in April and remained consistent for credit. Debit purchases were up 5.8% and credit purchases were up 1.9%, while debit transactions were up 3.7% and credit transactions were up 2.3%.
- The Goods sector was again the top contributor to growth in both credit and debit purchases, which may indicate consumers buying now to avoid potential upcoming tariff impacts.
- The Service sector remained a top contributor to year-over-year growth, with insurance sales/premiums having notable increases, up 6.8 for credit purchases and up 6.9% for debit purchases, Velera said.
- Growth in digital payment transactions was up 6.4% on credit and 10.9% on debit for April, while growth in physical card transactions was down 0.8% for credit and down 1.1% for debit. Within digital payments, the growth was attributable to increases in tokenized transactions, Velera said. Within physical card transactions, growth in contactless transactions was offset by declines in chip/EMV and mag stripe activity.
- The 12-month CPI through April increased by 2.3%, down 0.1% from March. Half of the increase was attributable to the shelter index. Energy increased, influenced by natural gas and electricity, offsetting drops in gasoline. Core inflation, which excludes food and energy, remained at 2.8% for April.
The Full Report
The full report is available for download here
