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Consumer spending grows 3.8 per cent in February as household expenditure stabilises

05 Mar 2018 19:01

  • Consumer spending grew 3.8 per cent year-on-year in February, marking the third consecutive month in which growth rose above the prevailing rate of inflation
  • Spending growth in supermarkets (3.2 per cent) softened from a peak of 4.4 per cent in January, helping expenditure on non-essentials (3.8 per cent) outpace that on the ‘must-haves’ (3.4 per cent)
  • Entertainment remained strong, driven by 7.4 per cent growth in cinema and theatre spending as Black Panther and the much-anticipated second release of Hamilton tickets boosted Britain’s box offices
  • Consumer confidence in household finances remains subdued, with half of Brits worrying that the outcome of Brexit negotiations will have a negative impact on their purchasing power

Consumer spending growth held steady in February – up 3.8 per cent year-on-year and in line with the three-month rolling average (3.9 per cent) – as consumers made small adjustments to their budgets to make room for the ‘nice-to-haves’.

Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows that supermarket spending (3.2 per cent) returned to levels seen over the past six months after a spike of 4.4 per cent in January. This kept expenditure growth on essentials, of which supermarket spend is a major component, to 3.4 per cent. As consumers continued to prioritise the ‘experience economy’, spending on non-essentials reached 3.8 per cent.

Entertainment was a driving force, performing strongly at 8.6 per cent. This was bolstered by cinema and theatre spending rebounding from five months of contraction to rise 7.4 per cent year-on-year, as Black Panther and the much-anticipated second release of tickets for the musical Hamilton boosted purchases at the box office.

Restaurants and pubs, meanwhile, remained healthy at 9.7 per cent and 10.0 per cent growth respectively, albeit not quite matching the strong spells of double-digit rises seen in 2017.

Continuing the trend of consumers seeking out experiences, travel spending jumped 7.4 per cent year-on-year – the highest level seen since December 2016, driven by a strong increase in airlines (6.8 per cent). This growth could be set to continue as one in four consumers (25 per cent) say they plan to spend more on holidays in the month to come.

Yet despite this propensity to spend on entertainment and travel, the mood amongst UK consumers remains subdued, with political uncertainty weighing heavily on consumers’ minds. With this month marking precisely one year before the UK is set to split with the EU, Brexit continues to be a cause for concern, with half of consumers (50 per cent) worrying that the outcome of negotiations will leave them worse off than they are now – a rise of 4 per cent compared to the month before.

More generally, consumers remain downbeat about their current spending power, with only half (54 per cent) feeling confident in their household finances, in line with January’s lacklustre levels. Rising prices are still causing many to feel the pinch: four in ten (39 per cent) Brits report they have less money to spend now than they did this time last year. Of these, two-thirds (67 per cent) say it is because their weekly shop seems more expensive than it used to be.

Paul Lockstone, Managing Director at Barclaycard, said:

“This is the third consecutive month that we’ve seen household spending growth above the prevailing rate of inflation suggesting that, while consumers remain cautious about their household finances, they continue to strike a balance between spending on essentials and on luxuries, whether that’s a holiday abroad or tickets for the latest blockbuster.

“With a year to go before Brexit, consumers are cautious about the potential ramifications of whatever settlement the UK achieves, and half of us fear that the outcome will leave us worse off than we are now. As negotiations continue it’s likely that this will continue to weigh on sentiment.” 

 

Y/Y Spend growth by category

Overall

Online

In-store

Clothing

1.7%

8.6%

-2.1%

     Family Clothing

3.8%

13.8%

-1.4%

     Shoe Shops

-6.0%

1.5%

-9.1%

     Women’s Clothing

-5.3%

-7.3%

-3.9%

     Men’s Clothing

6.1%

11.7%

2.7%

Restaurants

9.7%

28.7%

8.0%

Auto Parts & Accessories

3.3%

18.3%

-1.6%

Cinema, Theatre & Dance

7.4%

12.9%

-7.9%

Public Houses

10.0%

-5.1%

10.2%

Department Stores

-1.5%

4.2%

-2.9%

DIY Stores

0.0%

-2.4%

0.3%

Travel Agents

10.8%

17.4%

2.9%

Airlines

6.8%

6.7%

8.4%

Supermarkets

3.2%

12.8%

2.5%

Petrol

2.5%

11.1%

2.5%

Gambling

6.5%

22.8%

-29.6%

Vehicle Sales

-6.2%

6.3%

-6.4%

Hotels

4.9%

25.2%

-1.7%

Auto Repair Shops

-0.6%

-3.6%

-0.5%

Sports Shops

-0.4%

4.0%

-2.3%

Furniture Stores

2.9%

21.2%

-0.5%

Telecoms

2.1%

3.8%

0.9%

Household Appliances

-15.4%

-32.8%

-4.3%

Jewellers

-4.1%

11.4%

-6.6%

Sports and Games Establishment

6.3%

14.2%

1.7%

Garden Centres

3.7%

14.3%

1.4%

Discount Stores

5.1%

21.6%

1.7%

Gift Shops

0.7%

-9.6%

4.5%

Floor Covering Stores

1.6%

18.7%

-0.1%

Tourist Attractions

3.6%

6.2%

0.9%

Amusment Parks

11.5%

29.7%

6.8%

Aquariums

-3.5%

94.1%

-18.2%

Electronic Stores

-3.5%

3.8%

-7.3%

Cosmetic Stores

4.3%

6.6%

1.8%

Optical Goods

0.6%

10.8%

0.1%

Overall

3.8%

12.7%

0.2%

 

Online share of spend

Clothing

37.8%

Travel Agents

57.3%

 

Average Transaction Value

Overall

-4.8%

Clothing

-1.7%

Airlines

1.0%

Restaurants

-5.1%

Supermarkets

-2.6%

Petrol

-0.6%

 

Number of Transactions

Overall

9.2%

Clothing

3.4%

Airlines

5.7%

Restaurants

15.5%

Supermarkets

6.0%

Petrol

3.1%

Notes to editors

For more information please contact Linda Yang on +44 (0)2035 555 586 or siyuanlinda.yang@barclaycard.co.uk

The monthly spend data in this release relates to the period 21 January 2018 to 17 February 2018. It is compared with 21 January 2017 to 17 February 2017.

The February consumer confidence data cited in this release are from YouGov Plc. Total sample size was 1,650 adults. Fieldwork was undertaken between 19th – 20th February 2018.  The survey was 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 also 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 2016 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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