Consumer Card Spending Grew 4.3% In April

• Grocery spending continues to track below inflation, as shoppers switch to lower-priced products and seek out discounted “yellow sticker” items 
• Entertainment enjoyed a noticeable uplift, boosted by Eurovision ticket sales and families enjoying Easter half-term activities
• Demand for holidays and leisure activities sparked growth at airlines and sports & outdoor retailers
• However, both restaurants and clothing fell for the third consecutive month, as consumers cut back on discretionary spending to cope with rising household bills
• The Barclays 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 4.3 per cent year-on-year in April – less than half the latest CPIH* inflation rate of 8.9 per cent but slightly higher than March (4.0 per cent) – as rising costs continue to place pressure on Brits’ finances. However, the arrival of spring and the Easter Bank Holiday weekend fuelled growth at pubs and sports & outdoor retailers, while ticket sales for the Eurovision Song Contest in Liverpool boosted the entertainment sector.

Spending on groceries increased 5.5 per cent, yet this was significantly lower than the latest ONS food price inflation rate (19.2 per cent) and smaller than March’s growth (7.1 per cent). This comes as nearly nine in 10 shoppers (89 per cent) say they are concerned about the impact of rising food prices on their household finances, while 67 per cent are looking for ways to reduce the cost of their weekly shop.

Popular money saving methods adopted by these shoppers include buying discounted products nearing expiration, aka “yellow sticker” items (38 per cent), and using vouchers or loyalty points to get money off at the checkout (37 per cent). In addition, almost seven in 10 (69 per cent) have been making product “swaps” to save money recently, with over a quarter (27 per cent) shifting from supermarket own-brand premium ranges to standard or value ranges, and a similar proportion (24 per cent) swapping fresh food for frozen food.

Spending on fuel dropped -9.3 per cent, due to falling petrol and diesel prices, especially compared to April 2022, when they were much higher due to the Russian invasion of Ukraine.

Meanwhile, public transport spending grew 11.9 per cent compared to the same period last year, when fewer Brits were commuting to the office due to lingering concerns around the spread of Covid-19.

Spending on utilities saw less of a year-on-year uplift (34.4 per cent) compared to March (39.3 per cent), largely due to the energy price cap increase in April 2022. A year on from this energy price hike, Brits’ concern around the impact of rising household bills remains high at 90 per cent, leading over half (55 per cent) of Brits to reduce their discretionary spending to cope with the squeeze.

Despite this, spending on non-essential items saw higher year-on-year growth in April (4.6 per cent) than in March (3.5 per cent), as the Easter weekend and arrival of spring encouraged more Brits to enjoy social and outdoor activities. This led to a return to growth for sports & outdoor retailers (+0.6 per cent in April vs -4.5 per cent in March), as well as a boost for bars, pubs & clubs which saw a slightly larger uplift (3.7 per cent) than in March (3.2 per cent).

However, restaurants saw a steeper drop (-7.6 per cent) than in March (-5.6 per cent), while clothing remained in decline (-2.3 per cent) for the third month in a row. This is likely because new clothes and accessories and eating out at restaurants (both 60 per cent) are the most popular areas for cutbacks by Brits who are reducing their discretionary spending to cope with rising household bills (55 per cent).

Elsewhere, spending on entertainment enjoyed a sizeable year-on-year uplift (12.0 per cent), largely driven by ticket sales for concerts and shows including the upcoming Eurovision Song Contest in Liverpool, as well as families looking for more ways to entertain their children during the Easter half-term holiday. This is in addition to demand for entertainment generally being higher now than in April 2022, when the impact of Covid-19 was still hampering the sector.

At-home entertainment and “insperiences” also saw increased demand – digital content and subscriptions saw its largest rise since September 2021 (8.6 per cent), and fast food increased 9.0 per cent as Brits treated themselves to a night in with a boxset and a takeaway.

Despite ongoing inflationary pressures, Brits are still keen to book holidays to look forward to later in the year, with spend on airlines rising 32.1 per cent year-on-year – a slight uplift compared to March (28.5 per cent).

Consumers are feeling noticeably more confident in their household finances and ability to spend on non-essential items (67 per cent and 56 per cent respectively), compared to last month (59 per cent and 48 per cent respectively). Meanwhile, optimism in the future of the UK economy has also increased to 25 per cent, up two percentage points on March.

Esme Harwood, Director at Barclays, said: “The arrival of slightly warmer weather, along with the Easter Bank Holiday weekend, led to more Brits venturing outside to enjoy social and leisure activities in April.

“Entertainment received a boost, as music fans rushed to book tickets to the Eurovision Song Contest in Liverpool. Meanwhile, Brits are still searching for ways to reduce spend on essentials, so they can enjoy experiences such as holidays, shows and concerts.”

Abbas Khan, UK Economist at Barclays, said: “High inflation continues to squeeze real household disposable incomes and constrain consumption. However, this has been somewhat offset by the decline in wholesale energy prices and the price cap on household energy bills, which are contributing to an improvement in consumer confidence.

“The data suggests that pockets of the economy, particularly the leisure sector, enjoyed some renewed momentum in April. Going forward, while energy bills are set to fall from Q3, higher mortgage rates cloud the outlook as households continue to refinance at significantly higher rates through the year.”

Source : Barclays 

Image : IR Stone / shutterstock.com (237523528)

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