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Consumer spending slows to 2.9 per cent in August as overall outlook remains muted

Brits managing ‘the squeeze’ of inflation by adjusting spending priorities

Mon Sep 04 19:01:00 EDT 2017

  • Consumer spending growth slowed to 2.9 per cent in August, compared to a 2017 average of 3.8 per cent, as consumers rowed back across the board
  • Spending on entertainment (9.4 per cent) faltered slightly – with pubs and cinemas slowing – as shoppers shuffled their priorities to accommodate for increased expenditure in other areas, such as clothing (3 per cent)
  • Just over half (54 per cent) of consumers feel confident in their household finances, down from a summertime high of 69 per cent in June – with 47 per cent saying they are ‘feeling the squeeze’ as a result of inflation

Consumer spending growth softened to 2.9 per cent year-on-year in August – below the 2017 average of 3.8 per cent – as Brits managed ‘the squeeze’ of higher inflation and subdued wage growth by shuffling their purchasing priorities. 

August’s figure was in line with the three-month average (3 per cent), however, as household expenditure held steady to round out the summer. Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essentials increased at its slowest rate in 12 months, as supermarket growth cooled to 2.4 from 3.1 per cent in July. Expenditure on the forecourt also hit the second-lowest figure since August 2016 (4.5 per cent) thanks to lower prices at the pump.

Non-essential spending increased by just 3 per cent in August – slackening from 3.8 per cent the month prior – as entertainment growth retreated to 9.4 per cent from 12.5 per cent in July. Pub growth fell to single digits for only the second time this year (9.2 per cent), and spend on cinemas and event tickets flatlined (0.4 per cent) after the 24.3 per cent boost seen in July. Consumers did still splash out on one aspect of the ‘experience economy’, however, with sustained momentum in restaurant spending (12.4 per cent).

The drop in entertainment contrasted with increased spend on clothing, recovering from a contraction of 0.3 per cent in July to rise 3 per cent in August. Family clothing performed well in particular, up 4.5 per cent, coinciding with ‘back to school’ preparations and new uniforms. Taken together, the reduction in entertainment spend and growth of clothing suggests families may be starting to make minor adjustments in spending to meet their needs on a month-to-month basis.

Balancing the books appears to be a top priority for Brits, as only five in ten (54 per cent) now feel confident in their household finances, down from seven in ten (69 per cent) in June. Almost half (47 per cent) are still ‘feeling the squeeze’ due to inflation outpacing wage growth, while a further four in ten (43 per cent) have admitted to changing their everyday spending habits in response to sustained higher prices.

Of those, six in ten (60 per cent) visit discount stores more often, while over a third (35 per cent) have had to cut back on entertainment spend – suggesting two approaches of consumers ‘consciously coping’ with their weakened purchasing power.

Paul Lockstone, Managing Director at Barclaycard, said:

“Consumer spending growth slowed somewhat last month, with households paring back on both essential and discretionary purchases as part of an overall shuffle in priorities. While the adjustments made across the board were minor, spending on leisure time softened slightly in favour of increased spend on clothing – a reversal of what we saw in July.

“While the August data makes for interesting reading, it’s too early to suggest that this is the start of a new trend where consumers alter their spending patterns each month. As we head into the end of 2017, however, we’ll be looking to see if this approach continues and whether the ‘experience economy’, which started the year so strongly, will hold up in light of shifting priorities.”

 

Y/Y Spend growth by category

Overall

Online

In-store

Clothing

3.0%

18.5%

-2.9%

     Family Clothing

4.5%

25.8%

-2.8%

     Shoe Shops

-2.0%

12.9%

-5.9%

     Women’s Clothing

-2.3%

1.1%

-2.9%

     Men’s Clothing

3.6%

21.4%

-4.1%

Restaurants

12.4%

33.0%

11.1%

Auto Parts & Accessories

-0.6%

10.3%

-4.1%

Cinema, Theatre & Dance

0.4%

7.9%

-11.1%

Public Houses

9.2%

-17.3%

9.5%

Department Stores

-3.2%

3.0%

-4.5%

DIY Stores

0.1%

13.0%

-1.2%

Travel Agents

-3.6%

12%

-6.0%

Airlines

2.9%

5.0%

-8.9%

Supermarkets

2.4%

12.2%

1.8%

Petrol

4.8%

-50.0%

4.8%

Gambling

6.8%

60.8%

-79.9%

Vehicle Sales

-13.6%

7.8%

-14.0%

Hotels

3.0%

24.5%

-1.5%

Auto Repair Shops

-12.7%

1.6%

-13.1%

Sports Shops

4.1%

6.1%

3.4%

Furniture Stores

24.3%

22.5%

24.6%

Telecoms

11.8%

30.8%

0.2%

Household Appliances

0.0%

16.7%

-6.8%

Jewellers

-0.3%

16.5%

-2.4%

Sports and Games Establishment

3.5%

2.9%

3.8%

Garden Centres

-4.9%

12.4%

-7.5%

Discount Stores

4.7%

21.4%

1.7%

Gift Shops

-3.1%

-14.8%

0.6%

Floor Covering Stores

1.9%

6.5%

1.5%

Tourist Attractions

0.8%

2.8%

-0.5%

Amusment Parks

12.2%

22%

9.1%

Aquariums

-22.5%

9.1%

-28.2%

Electronic Stores

-0.9%

7.8%

-5.0%

Cosmetic Stores

10.2%

17.4%

4.0%

Optical Goods

1.9%

11.6%

1.4%

Overall

2.9%

15.7%

-1.3%

Online share of spend

Clothing

31.7%

Travel Agents

56.7%

Average Transaction Value

Overall

-5.2%

Clothing

1.5%

Airlines

-0.4%

Restaurants

-6.5%

Supermarkets

-2.8%

Petrol

-0.1%

Number of Transactions

Overall

8.5%

Clothing

1.5%

Airlines

3.3%

Restaurants

20.3%

Supermarkets

5.4%

Petrol

4.9%


For more information please contact Charlotte Brocklebank on 0207 331 5478 or Brocklebank, Charlotte.Brocklebank@cohnwolfe.com.

The monthly spend data in this release relates to the period 23rd July to 19th August 2017. It is compared with 23rd July to 19th August 2016.

The August consumer confidence data cited in this release are from YouGov Plc. Total sample size was 1,664 adults. Fieldwork was undertaken between 21 and 22 August 2017. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). The June 2017 consumer survey findings were carried out by Longitude Research on behalf of Barclaycard. There were at least 2,000 respondents, 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.