New Data Shows Inflation Could Stunt Travel Spending Rush

A new report from Mastercard Inc. suggested that “running inflation” was hurting the bank spending habits from low-income customers, including travel purchases.

Corresponding Reuters.comThe study found that cardholders are shifting their priorities from expensive items to essentials and groceries, but travel still remains a priority, and helped the credit card company round off a strong quarter.


Mastercard reported the strongest summer travel season since the pandemic began, thanks to pent-up demand and the easing of coronavirus-related restrictions. Cross-border volumes also grew 58 percent on a local currency basis in the second quarter, adding 14 percent to dollar volume on the company’s network to $2.1 trillion.

“In the United States, you’re seeing a downward trend in terms of growth rates on the lower-income side,” Sachin Mehra, Mastercard’s chief financial officer, said during a quarterly conference call with investors.

While spending from higher-income consumers and the surge in cross-border volume will keep spending strong for now, the company sees the possibility of a recession after two quarters of decline as a sign that travel spending could fall.

Credit card company Visa Inc told Reuters the company has yet to see any signs of a pullback in spending from its cardholders.

In June, location-based insights provider PlaceIQ released new data showing that after two years of less travel and fewer visits to shops and restaurants, Americans are back on the move.

However, the US consumer Spending in these categories is declining across the board compared to the previous year. The data suggests that the current inflation situation is responsible for the trend in consumer behavior, non-pandemic factors such as social distancing or advice to stay at home.

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