Australian card activity growth has slowed sharply in recent months, with non-fuel spending flattening and real consumer activity estimated to be contracting amid inflation and higher fuel costs, according to a Monday report by Westpac Banking (ASX:WBC, NZE:WBC).

The Westpac-DataX Card Tracker Index continued its gradual decline, falling 1.6 points over four weeks to 153.2 in the week that ended May 23, slightly below the year-to-date average of 154.

Quarterly growth slowed to around 0.6% from 1% in the first quarter, while non-fuel spending was essentially flat, suggesting higher fuel costs are weighing on broader consumption and likely pushing real spending into decline.

Monthly growth has been volatile due to fuel price swings in March and April, but these effects are fading, with the latest weekly data pointing to a modest 0.1% monthly rise in May, despite some residual Easter-related noise that will drop out in the coming weeks.

Activity is stalling across discretionary services, essential services and non-fuel essential goods, which make up 68% of total card spending, while non-fuel card activity is slipping in New South Wales and Victoria, flat in Queensland and still growing modestly in Western Australia.

Consumer spending appears to have stalled since early March, with card data pointing to a 0.9% quarterly decline in real spending and a 1.3% drop in real per-capita spending, per the report.