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Consumer spending grew 4.0 per cent in 2018 amidst a year of ups and downs

Mon Dec 31 04:00:00 EST 2018

  • Overall spend grew 4.0 per cent year-on-year in 2018, rising slightly from 3.5 per cent in 2017, boosted by a modest uplift in non-essential spending
  • 2018 was a tumultuous year with spending slowing to just 2.0 per cent in March, before rebounding in the long, hot summer that saw three months of consecutive growth surpassing 5.0 per cent
  • Entertainment spending was consistently strong, resulting in robust discretionary expenditure in contrast to the challenges faced by the high street

Consumer spending grew 4.0 per cent year-on-year in 2018, rising slightly from 3.5 per cent growth the previous year, as entertainment bolstered the struggling retail sector.

According to Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, 2018 was a tumultuous year for consumer spending. Factors such as extremes in weather and wider political and economic uncertainty resulted in a series of shifts in purchasing patterns.

Following a steady start to the year, in March consumer spending slowed to just 2.0 per cent as adverse weather caused by the ‘Beast from the East’ kept shoppers at home. This equated to a decline in expenditure in real terms, with growth dropping below the annual rate of inflation.

Summer, however, saw a different story as spending growth surpassed 5.0 per cent for three consecutive months. The ongoing heatwave as well as World Cup fever encouraged consumers to spend on days out and long summer evenings. Autumn then experienced more subdued levels of spending, as Brits balanced their budgets in the run up to Christmas.

Essential expenditure boosted by petrol

At 4.7 per cent, essential expenditure remained in line with 2017’s figure of 4.6 per cent. Supermarket expenditure was a driving force behind essential spend and was consistent with 2017’s rate of growth at 3.6 per cent.

However, essential spending was bolstered by rising petrol prices in the second half of the year, which saw petrol expenditure increase by an average of 10.4 per cent. This is in contrast to the first six months of 2018 where the level of growth was more modest at 3.6 per cent.

Consumers prioritising entertainment

When looking at non-essentials, growth saw a slight increase reaching 3.6 per cent compared to 3.2 per cent in 2017. Spending on entertainment continued to be a priority for consumers, growing by 9.0 per cent as pub (11.2 per cent) and restaurant expenditure (8.7 per cent) remained strong.

Ticket spending saw a year of peaks and troughs, ranging from negative territory to double digits – settling at an average growth of 6.3 per cent for the year. Key ticket sales for Glastonbury Festival (October) and the Spice Girls reunion tour (November) alongside high profile box office releases such as ‘Fantastic Beasts: The Crimes of Grindelwald' (November) boosted spending by 22.1 and 30.5 per cent respectively in those months.

Struggling retail sector

Spending in the retail sector was in decline. Clothing expenditure reached just 0.7 per cent growth, falling below the rate of inflation and representing a decline in real terms. While family clothing (1.8 per cent) and men’s clothing (3.0 per cent) both saw increases, this was not enough to compensate for women’s clothing declining by 1.7 per cent.

Continuing a trend from 2017, department stores and electronic stores remained under pressure seeing contractions of 3.7 and 3.8 per cent respectively.

Consumer confidence reaches record low

Amidst high-profile closures on the high street and ongoing political and economic uncertainty, consumer attitudes towards the UK economy as a whole were subdued. By October, a record low of just 28 per cent of Brits felt confident in the UK economy.

On a more personal level, the proportion of consumers feeling confident in their own household finances also paled in comparison to previous years, reaching 52 per cent in November – the lowest level since Barclaycard started tracking this data point in March 2015.

Esme Harwood, Director at Barclaycard, said:

 “Spending remained relatively robust in 2018, with strong growth in entertainment spending balancing continued struggles on the high street. The weather played a key role, with the long hot summer driving spending, while the colder weather kept consumers from the shops earlier in the year.    

“Ongoing political and economic uncertainty has begun to have a marked impact on how people feel about their finances. Confidence in the UK economy and confidence in household finances both dropped to their lowest levels in October and November respectively. Looking ahead, it will be interesting to see how consumers respond to the January sales and what impact the wider environment will have on household budgets and consumer confidence in the New Year.”

 

Spending growth in 2018 (year-on-year)

Total consumer spending

4.0%

Essential

4.7%

Non-essential

3.6%

Core categories

 

Entertainment

9.0%

Travel

7.2%

Food & Drink

4.0%

Clothing

0.7%

Household

-1.8%

Detailed categories

 

Pubs

11.2%

Restaurants

8.7%

Petrol

6.7%

Cinema and Theatre

6.3%

Airlines

6.2%

Supermarkets

3.6%

Hotels

3.2%

Men’s clothing

3.0%

Garden centres

1.9%

Family clothing

1.8%

DIY stores

0.6%

Women’s clothing

-1.7%

Department stores

-3.7%

Electronic stores

-3.8%

Discount stores

-4.6%

Notes to editors

For more information please contact Rebecca Butler on +44 (0) 207 116 1993 or Rebecca.Butler@barclaycard.co.uk

The spend data in this release relates to the period 24 December 2017 – 18 November 2018. It is compared with 24 December 2016 – 18 November 2017.

The October and November consumer confidence data cited in this release are from YouGov Plc. Total sample size was at least 1,600 adults in each survey. The surveys were carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). Consumer survey findings going back to 2014 were carried out by Longitude Research on behalf of Barclaycard. There were at least 2,000 respondents in each survey, providing a representative sample of adult UK consumers by age, gender, region, income group, professional status and family situation.

About Barclaycard

Barclaycard, part of Barclays Bank PLC, is a leading global payment business that helps consumers, retailers and businesses to make and take payments flexibly, and to access short-term credit and point-of-sale finance. In 2017 we processed over £250bn in transactions globally. Barclaycard is a pioneer of new forms of payment and is at the forefront of developing viable contactless and mobile payment schemes for today and cutting-edge forms of payment for the future. We also partner with a wide range of organisations across the globe to offer their customers or members payment options and credit.

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