Morricession bleeds on

Shaping a little better than the Delta lockdowns now though still a material blow to growth:

― The Westpac Card Tracker Index dipped 1.1pts to 106.3 over the last week of Jan, marking a further slight softening in activity. That said, the index remains at a relatively firm level overall consistent with annual growth in card activity running 6.3ppts above its pre-COVID pace (see p6 for more details on how the index is constructed).
― The broad picture is still of activity holding up relatively well, particularly compared to the sharp loss of momentum seen in the weeks immediately following Christmas. To the extent that an omicron-driven ‘voluntary lockdown’ is still having a dampening effect, it appears to be fairly mild overall. Activity is slightly weaker in some states (SA and Qld) and in some expenditure categories (discretionary services) but still posting gains.
― The latest weekly updates remains consistent with a 3% decline in total card activity in Jan in seasonally adjusted terms.

Allowing for price inflation, which is estimated to be running at a robust 4%+ annual pace, this points to a real inflation-adjusted decline of around 3.5%mth. While sizeable, that is milder than the falls seen heading into hard lockdowns – card activity contracted 8.6% when NSW and Vic were heading into their ‘delta’ lockdowns last July. For total consumer spending, which is less volatile than card activity, the fall is roughly consistent with a decline in the 2.5-3% range for the month.