Consumer Card Spending Grew 1.9% In February

• February’s 1.9 per cent growth represents the smallest increase since September 2022, when consumer card spending rose 1.8 per cent
• A drop in food and fuel prices caused a slowdown in Essentials – while wet weather contributed to a 2.2 per cent fall in high street spending (excluding groceries)
• Insperiences, such as takeaways and digital content, grew 6.5 per cent as Brits opted for nights at home watching new releases such as ‘One Day’
• Half of shoppers have noticed product shortages amidst supply chain disruption, while ‘drip pricing’ remains a frustration as the Government’s proposed ban on hidden online fees at the checkout is welcomed
• The Barclays Consumer Spend report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending 

Consumer card spending grew just 1.9 per cent year-on-year last month – significantly lower than the latest CPIH* inflation rate of 4.2 per cent and the smallest growth since September 2022. Face-to-face retail (excluding groceries) was a major contributor to this slowdown, contracting 2.2 per cent, which helped boost “Insperiences”, including takeaways and digital content, as Brits spent more time at home. Reassuringly, concerns about inflation, rising food prices and increasing household bills eased, while confidence in non-essential spending reached a two-year high.

Essential items saw less growth (2.3 per cent) than in January (4.2 per cent), with lower prices at the pump leading to a fall in fuel spending (-12.2 per cent). Meanwhile, spending on public transport increased just 3.8 per cent – the smallest rise since March 2021 – as wet and icy weather combined with industrial action caused train cancellations and delays across the country.

Food price inflation dropped to its lowest level since April 2022, at 7.0 per cent*, which contributed to supermarkets (3.9 per cent) and food and drink specialist stores (2.7 per cent) seeing lower uplifts than in January (both 5.2 per cent).

A frugal February for supermarket shoppers

The deceleration in food inflation has helped ease concern about rising grocery prices. While still high at 84 per cent, this is the lowest figure recorded since Barclays started tracking this data point in December 2021.

Two thirds (66 per cent) of Brits are still looking for ways to get more value from, or to reduce the cost of, their weekly shop. To save money, two fifths (42 per cent) of this group have cut down on supermarket impulse buys, while a third (32 per cent) is stocking up on their favourite or essential products when they are on offer. A further quarter (25 per cent) is sticking to basic ingredients or cupboard stables – such as pasta, rice and vegetables – to prepare simple, cheaper meals at home. 

Shrinkflation and supply issues brew, as shoppers spot tea shortages

Recent supply chain disruption and the continuing impact of shrinkflation are front of mind for shoppers. Over half (51 per cent) has noticed supermarket products running out of stock in the last month, while three in 10 (29 per cent) are specifically concerned about tea shortages, in light of reports of empty space on the shelves.

Concerns about the cost and size of products – owing to shrinkflation – remain high at 78 per cent. As a result, 63 per cent of Brits say that they would like to see the Government taking action to intervene – for example, by mandating manufacturers disclose changes in content, volume or weight on product labels.

Eagle-eyed Brits spot “hidden” charges

As consumers continue to pay close attention to their finances, over a third (36 per cent) say they have noticed more examples of brands adding extra and hidden charges at the checkout when spending online, otherwise known as “drip pricing”.

This is most frequently spotted when paying for food delivery services (39 per cent), airline tickets (32 per cent) and live events (32 per cent). In response, seven in 10 (68 per cent) welcome the Government’s plan to ban unavoidable hidden fees, requiring businesses to disclose all costs upfront, as part of the Digital Markets, Competition and Consumers Bill (DMCC).

Close to four in 10 (37 per cent) say drip pricing is their biggest shopping frustration when paying online, followed by auto-renewed subscriptions (30 per cent), and altered or surged prices in response to demand – also known as dynamic pricing (28 per cent).

Wet weather hampers the high street

Spending on non-essential items increased just 1.7 per cent in February – the lowest growth since September 2022 – as wetter weather cast a cloud over multiple sectors and Brits spent more time indoors.

Face-to-face retail (excluding grocery shopping) and clothing stores saw declines of -2.2 per cent and -1.0 per cent respectively. Meanwhile, online retail (excluding groceries) grew slightly, up 1.2 per cent, and occupied 56.2 per cent of retail spending (excluding groceries), indicating that Brits chose to avoid the rain and shop online from the comfort of their homes.

Insperiences boosted as restaurants and pubs saw slowdown

Events such as the Super Bowl and BAFTA Film Awards encouraged households to enjoy cosy nights in front of the TV instead of going out in February, helping to boost Insperiences by 6.5 per cent overall. Takeaways and fast food increased 5.0 per cent year-on-year, while digital content and subscriptions saw its highest growth (11.8 per cent) since August 2021, spurred by popular new releases such as ‘One Day’.

More nights in led to a disappointing  month for Restaurants, contracting -13.4 per cent (vs -11.6 per cent in January), while growth in spending at bars, pubs and clubs was at its lowest level (1.1 per cent) since September 2022.

Demand for holidays holds up

Pointing to a preference for making memories over buying physical goods, holidays abroad remain a priority for discretionary spending. February was a positive month for travel agents, who recorded higher growth (10.1 per cent) than in January (8.0 per cent). This comes as nearly three quarters (73 per cent) of Brits say they will be going on holiday in 2024. However, hotels, resorts and accommodation saw its lowest rate of growth (0.3 per cent) since May last year, suggesting that holidaymakers are opting for escapes abroad instead of staycations. 

Easing consumer concerns signal cautious optimism

Consumers’ confidence in their ability to spend on non-essential items reached its highest point since November 2021 last month, at 59 per cent. Meanwhile, concerns about inflation, and rising household bills also softened to 84 per cent, the most positive figures for more than two years – indicating that easing inflationary pressures are having a positive impact on household finances.

Karen Johnson, Head of Retail at Barclays, said: “February’s wet weather meant Brits chose to spend more time indoors, resulting in a slowdown in high-street and hospitality spending. This shift in behaviour meant insperiences enjoyed a boost, as consumers opted to enjoy cosy nights in with a TV show and a takeaway.

“At the supermarket, the majority of shoppers have noticed the impact of supply issues on stock, with tea shortages causing the most concern. Meanwhile, ‘drip pricing’ has topped the list of shopper bugbears, particularly when using food delivery services and buying airline tickets.

“With Brits having reined in discretionary spending during the winter months, and as  inflationary pressures begin to ease, retailers will be hopeful that the onset of warmer weather lifts spending – particularly if consumer confidence improves in the summer.”

Jack Meaning, Chief UK Economist at Barclays, said: “We have continued to see encouraging signs of slowing price growth so far in 2024, particularly in the retail sector. Recent data shows shop price and grocery inflation decelerated significantly in February, as retailers offered shoppers discounts and promotional offers. This will be a welcome reprieve for consumers, and a probable explanation of last month’s subdued card spending growth: while many people will have taken advantage of recent price promotions, they look to have held back on spending at least some of what they saved elsewhere.” 

Overall growth figures

Source : Barclays

Image : Barclays

For all the very latest news and intelligence on the UK's largest home improvement and garden retailers, sign up for the Insight DIY weekly newsletter.