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Consumer spending growth falls to lowest level since 2016 as essential spend drops

Wed Jan 09 19:01:00 EST 2019

  • Consumer spending grew 1.8 per cent year-on-year in December, equating to a decline in real terms when adjusting for inflation
  • Growth in essentials dipped to its lowest level since 2016, driven by a contraction in supermarket spending
  • As the high-street continued to struggle, clothing spending saw its third consecutive month in negative territory
  • Caution looks set to continue as half of UK adults believe there will be a decline in the state of the UK economy in 2019

Consumer spending grew 1.8 per cent year-on-year in December, the lowest rate of growth seen since March 2016. With inflation at 2.3 per cent, this equated to a contraction in real terms.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, shows that essential spending growth dipped to just 0.6 per cent – the lowest figure recorded since July 2016 – caused by a contraction in supermarket spending of 1.1 per cent.

Non-essential expenditure saw a muted month, rising by a modest 2.0 per cent. This figure however, was boosted by strong growth in pubs and restaurants. Pubs saw an increase of 12.9 per cent whilst restaurants were at 9.1 per cent as Brits continued to make the most of the festive period by relaxing and dining out.

The high street, on the other hand, continued to face challenges despite the festive season. Clothing spending saw its third consecutive month of negative territory, falling by 3.0 per cent, while department store expenditure declined by 6.3 per cent. Spending in this sector remained subdued as shoppers cut back on clothing and balanced out their budgets when it came to Christmas time.

In the face of numerous reports of store closures and the challenges facing well-known high street brands, over half of Brits (52 per cent) say they want to support their local high street. Furthermore, 38 per cent said they are deliberately choosing the high street over online-only retailers, suggesting consumers want the high street to remain an important part of their local community.

Despite Brits’ good intentions to support their local economies, many remain concerned about their spending power. One in two consumers (49 per cent) expect to cut back in January to cover the cost of Christmas, while 48 per cent say they feel less confident about their personal finances in the coming year than they have done for many years.

In terms of the wider picture, one in two (50 per cent) UK adults are concerned that there may be a decline in the UK economy – up from 43 per cent last year.

Many shoppers are anticipating price increases over the next three months, particularly around the cost of fuel (65 per cent), household utilities (66 per cent) and groceries (72 per cent).

Esme Harwood, Director at Barclaycard, said: “Growth in consumer spending dropped to its lowest level since 2016 and represents a decline in real terms. Many Brits were more modest in their approach to Christmas spending compared to 2017, cutting back on the essentials to balance the costs of the festive season.

“Despite a desire to support their local high street, Brits expect to cut back in January and remain cautious amidst ongoing economic uncertainty.”

 

Y/Y Spend growth by category

Overall

Clothing

-3.0%

     Family Clothing

-3.5%

     Shoe Shops

-1.3%

     Women’s Clothing

-3.3%

     Men’s Clothing

-4.0%

Restaurants

9.1%

Auto Parts & Accessories

2.9%

Cinema, Theatre & Dance

6.9%

Public Houses

12.9%

Department Stores

-6.3%

DIY Stores

4.4%

Travel Agents

13.0%

Airlines

1.9%

Supermarkets

-1.1%

Petrol

4.4%

Gambling

-5.7%

Vehicle Sales

-3.0%

Hotels

3.9%

Auto Repair Shops

3.1%

Sports Shops

-4.3%

Furniture Stores

8.7%

Telecoms

-1.0%

Household Appliances

-13.5%

Jewellers

-8.1%

Sports and Games Establishment

7.7%

Garden Centres

3.2%

Discount Stores

-16.3%

Gift Shops

-5.2%

Floor Covering Stores

3.8%

Tourist Attractions

4.2%

Amusment Parks

9.5%

Aquariums

40.0%

Electronic Stores

-7.9%

Cosmetic Stores

2.2%

Optical Goods

6.1%

Overall

1.8%

 

Average Transaction Value

Overall

-5.3%

 

Clothing

-0.2%

Airlines

-6.4%

Restaurants

-4.1%

Supermarkets

-5.5%

Petrol

0.8%

 

Number of Transactions

Overall

7.5%

 

Clothing

-2.8%

Airlines

8.5%

Restaurants

13.7%

Supermarkets

4.6%

Petrol

3.6%


Notes to editors

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

The monthly spend data in this release relates to the period 18 Nov – 22 Dec 2018. It is compared with 18 Nov – 22 Dec 2017.

The consumer confidence survey used for this release was carried out between 17 and 20 December 2018 by Longitude Research on behalf of Barclaycard. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, income group, professional status and family situation.

*Online and In-store splits of Spend insights data are not currently available 

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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