November outstanding credit card balance jumps after months of languishing  

The outstanding credit card balance rose in November after months of languishing when banks tightened credit standards, while consumers caught up in red-hot inflation cut back on their spending. 

The data for the month published last week by the Central Bank showed that the total outstanding balance of credit cards issued by all licensed commercial banks had risen by Rs.3, 721 million.
This was the first time the balances climbed by such a large amount in many months this year. 

In October, the card balance slipped after slowing in September when inflation hit the highest ever levels Sri Lanka had witnessed since officials started measuring the movements in the consumer price index. 
With November ascent, the total outstanding card balance stood at Rs.140.4 billion by November end. With November data, the total outstanding card balance has increased by Rs.7,138 million in the 
eleven months. 

While it is not entirely clear what drove last month’s card balance, there was evidence that people began spending on leisure, travelling, dine-outs and other recreational activities after months-long hiatus caused by fuel and other commodities shortages and social and political unrest.
Despite consumer prices still remaining at extremely elevated levels, the last three inflation reports showed a continuous easing in the pace of price growth. 

Sri Lanka’s consumer prices measured by the Colombo Consumer Price Index peaked at just under 70 percent in September before easing to 57.2 percent in December. The so-called core prices, which is measured barring the often volatile prices such as food, energy and transport, decelerated to 47.7 percent from 49.4 percent in November. Central Bank’s inflation target remains between 4 to 6 percent.  

While the movements in card balances provide a reasonable idea into consumer spending and its patterns, a direct correlation between the two couldn’t be drawn because majority of the transactions still occur outside the sphere of electronic cards.
Meanwhile, reflecting the tougher credit standards, November saw the number of active cards falling quite considerably by 21,170, contracting the number of people who use an active card to 1,954,165 by the end of the month.