“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,’’ said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.’’
Rising costs of food and gasoline are leaving Americans less money to spend on discretionary items, slowing the pace of the recovery, Tavares said. Household spending accounts for about 70 percent of the world’s largest economy.
Swings in fuel and food buys have been “dramatic,’’ Tavares said. The volume of gas buys placed on credit cards jumped 39 percent last month from a year earlier, compared with a 21 percent increase in June 2010, he said. Food shopping increased 5 percent after falling 7 percent last year.
The value of an average transaction on credit cards outpaced the gain for debit cards, showing consumers are increasingly relying on borrowing to pay for gasoline and other necessities, Tavares said.
