26 September 2022 03:28 am Views - 447
People swiped their credit cards more in August as the total outstanding credit card balance increased by Rs.3,228 million, perhaps reflecting increased spending necessitated by the soaring inflation and returning of some semblance of normalcy after the fuel crisis was largely brought under control ending a near economic standstill in July.
After people could travel again from the beginning of August with fuel becoming less of an issue compared to a month ago, they started spending on groceries, restaurants, clothing and leisure activities more, although the prices were at least twice or more than a few months ago.
Many people whose incomes weren’t sufficient to meet their needs and wants due to runaway inflation were forced to dig into their credit card balances to maintain their lifestyles at least quite close to what they had before the economy came crumbling down from March onwards.
Sri Lanka’s national consumer prices accelerated to 70.2 percent in August from a year ago with food prices soaring 84.6 percent and non-food inflation which comprises of travelling, clothing, restaurants, utilities, house furnishing and the likes rising by 57.1 percent.
The August credit card spend was an about turn from the negative growth of Rs.3,961 million recorded in July.
Sri Lankan economy shed 4.8 percent of its size in the first half of the year and is on course for an 8.8 percent decline by the year’s end, the sharpest ever annual contraction in the country’s post independence history.
Noticing sudden surge in card utilisation levels, certain banks have cut the pre-approved balance of their card holders to keep the financial fallout of possible defaults to a minimum citing deteriorating macro-economic conditions.
Reflecting how tight the credit conditions are, credit card outstanding balance in the first eight months rose by only Rs. 2,664 million to Rs.135, 949 million.
Banks also pulled back from canvassing new cards as the number of active cards also fell in August by 2,040 to 1,963,705.
.