Payments

The PSCU Payments Index April 2022: Deep Dive into Gasoline Sector Highlights Rising Fuel Costs Complicated by the War in Ukraine

By: Mike Bell, Vice President, Insights at PSCU

The April edition of the PSCU Payments Index finds continued shifting consumer behavior with slowed growth in debit card purchases and continued strong growth in credit card activity.

The Consumer Confidence Index rebounded slightly in March following declines in January and February. Consumers cited continued inflationary pressures, including rising fuel costs further complicated by the war in Ukraine. It has been two months since Russia’s invasion of Ukraine, leading to multiple sanctions against Russia, including the United States banning the import of Russian oil. This ban further exacerbates rising gas prices. To alleviate some of the rise in fuel costs, President Biden is releasing one million barrels of oil from the U.S. strategic reserves daily for the next six months.

Rising energy prices are having a ripple effect on U.S. and world economies. In this month’s Deep Dive, we take a deeper look into the Gasoline sector. Looking forward to the summer months, there are a number of measures planned to provide assistance to and protect consumers dealing with the elevated gas prices, including proposed expansion of the sale of biofuel, which is estimated to reduce the average price by ten cents per gallon. Buy Now, Pay Later (BNPL) options are also emerging with options to pay for gasoline fill-ups over four installments.

Key takeaways from our April report include:

  • The Consumer Price Index (CPI-U) for March increased to 8.5% – a 1.2% seasonally adjusted increase and the fastest rate of inflation in 40 years. Sectors leading to the increases included Gasoline, Shelter and Food, with Gasoline accounting for over half of the total increase. In March, the Fed increased interest rates by a quarter-point and there is market anticipation of back-to-back half-point increases for April and May.
  • Gasoline prices hit a 14-year high in March at $4.32 per gallon, a 49% increase from March 2021. While year-over-year Automated Fuel Dispenser (AFD) gas purchases were up 65% for credit and 43% for debit, the estimated quantity of gasoline purchased was up 10% on credit cards and down 4% on debit cards. While the year-over-year growth in credit AFD activity (transactions and purchases) was greater than the growth in debit AFD activity for every age demographic, the highest growth was seen in the youngest Gen Z population (19 to 25 years old), with credit purchases growing by 100% and debit purchases growing by 53% as compared to March 2021.
  • Consumer spending remains strong, with credit purchases up 22% and debit purchases up 1% year over year. Contributing to the markedly lower growth in debit was exceptional spend in 2021 that included the third economic stimulus payment. The Entertainment sector posted top growth rates for credit and debit purchases in March, with Gasoline and Travel rounding out the top three growth sectors for credit and debit purchases. Entertainment was up 82% for credit and 43% for debit, Travel was up 79% for credit and 16% for debit, and Gasoline was up 58% for credit and 30% for debit.
  • For debit cards, the growth in transactions exceeded the growth in purchase volume, resulting in the first decrease in debit card average purchase in the past two years. For March, the average debit purchase was $47.11, down 1.5% or $0.74 compared to March 2021. The March 2022 average credit card purchase was up 4.6% year over year, hitting a new PSCU Payments Index high at $74.46.
  • The credit card delinquency rate for March was 1.38%, which was 36 basis points lower than the pre-pandemic level of March 2019. Previously, the last month when the difference to the pre-COVID delinquency rate was 36 basis points was in August 2020.

Looking Ahead

The Payments Index continues to evolve along with consumer preferences and behaviors. This month’s edition marks the first anniversary of the monthly publication that evolved from our successful weekly transaction trend analysis launched at the beginning of the COVID-19 pandemic. With these monthly editions, we are now emphasizing our monthly Deep Dive topic and focusing on year-over-year changes, with fewer comparisons to pre-pandemic 2019. We hope our financial institutions can take these relevant insights to help make informed, strategic decisions throughout 2022.

Mike Bell is the Vice President of PSCU’s Insights team, which delivers a variety of shared services including corporate surveys, competitive and market intelligence, RFP and due diligence support and management of the PSCU Payments Index. Prior to his current role, Mike managed the Workforce and Quality functions in PSCU’s Contact Centers. He has been in Operations Management throughout his career, including time with JPMorgan Chase, FIS, Liberty Mutual and Air Canada, with a focus on analytics and delivering process and performance improvements.