Mastercard: Service Spending Making a Comeback

The month of March marked the ongoing return to pre-pandemic consumer spending, Mastercard said Wednesday (April 6) in its Spending Pulse report.

“From airlines to lodging, spending on services is making its comeback, while in-store retail sales are rebounding as consumer mobility increases,” the report said.

The SpendingPulse, which measures online and offline retail sales, found that total retail sales — excluding the auto sector — rose 8.4% year-over-year and 18% compared to pre-pandemic spending (2019), not adjusted for inflation.

Mastercard said the findings are similar to the year-over-year growth recorded in February and just above January growth levels.

Read more: Online Grocery Prices in US Jump 7.6% in February Excluding Delivery

“While the pandemic and lockdowns may have temporarily limited where consumers could spend their paychecks and free time, key trends for March 2022 highlight the diversification of consumer spending across sectors and channels,” the report said.

Mastercard noted that airline spending saw one of the strongest rebounds, as people began spending on travel again to the tune of 44.8% year-over-year growth in March.

Consumers were also spending more on restaurants (a 19% increase), lodging (46%), luxury goods (27%) and department stores (14%).

Spending on fuel rose 40%, driven primarily by inflation, although the report noted that consumer mobility has continued to rise along with a growth in commuter traffic and leisure travel.

Read more: Shoppers Duck Name Brands Amid Grocery Inflation

“Retail sales remain strong but are stabilizing as consumers resume spending on passion areas like travel, live entertainment, indoor dining and other in-person activities,” said Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks. “After nearly two years of cautious optimism around the broader reopening, it’s a healthy sign that consumers are returning to a balanced level of spending across retail sectors and services.”

But as PYMNTS reported earlier this week, inflation has led to one notable shift in consumer spending habits: an eschewing of brand name products. A recent Jefferies Group survey found that 80% of consumers were actively seeking ways to lower costs by buying more items on sale and less expensive products and private-label brands.