- January spend grew 3.2 per cent as higher wage growth and falling prices allow consumers to treat themselves
- Chilly weather pushed Brits to wrap up and tuck in, as spending on clothing and in restaurants grew 7.4 per cent and 17.4 per cent, respectively
- Healthy growth reflects Barclaycard research revealing 43 per cent of consumers plan to spend more in the early part of 2015
UK consumers are starting to reap the benefits of the economic recovery as higher wage growth and low inflation helped push spending growth up 3.2 per cent in January.
This is a one per cent increase on growth reported in January 2014, adjusted for the effect of snowy weather in 2013, and also marks the seventh consecutive month in which spending rose above three per cent.
The monthly data from Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, shows spending on discretionary items grew 3.5 per cent – more than seven times that of the essentials (0.4 per cent), classified as supermarket spending and petrol. The rise in ‘non-essential’ spending suggests consumer confidence is returning, as inflation fell to 0.5 per cent in December and economic growth hit 2.6 per cent, its highest rate since 2007.
A chilly start to the year, coupled with the January sales, boosted clothing spend 7.4 per cent as consumers grabbed new coats to keep warm. Department stores saw a rise of 5.8 per cent, and online spend was strong – up 17.4 per cent – as people avoided the cold and shopped from the comfort of their sofas.
Restaurants saw the best performance of the month, growing 17.4 per cent overall. This was driven by transactions volumes climbing 23.5 per cent; transaction values fell five per cent, however, suggesting diners are treating themselves more often but spending less in order to do so. Takeaways benefitted from households ordering in, with online restaurant spend rocketing 52.3 per cent.
Consumers also tried to beat the January blues by booking getaways, with online spending at travel agents up 12 per cent, and overall hotel growth jumping 8.2 per cent as people escaped the cold weather.
After spending more on clothes, eating out and holidays, consumers looked to balance their budgets by heading to discount stores. These saw a robust growth in spending in the first month of 2015, climbing ten per cent.
January’s figures support Barclaycard research conducted for its second quarterly report, ‘Where’s Britain Spending?’, revealing 43 per cent of consumers plan to spend more in the early part of 2015.
This comes on the back of nearly a third (31 per cent) of people saying they expect their overall level of confidence to increase this year as they start to benefit from the country’s increasing economic fortunes. Almost a third (30 per cent) anticipate an increase in their personal income and a quarter (26 per cent) predict a rise in their level of disposable income.
Despite this, Brits continue to spend responsibly – according to the British Bankers Association, overdrafts are down ten per cent on 2013 and interest-bearing credit card debts have declined 4 per cent year-on-year.
Chris Wood, Managing Director at Barclaycard, said:
“Consumer perception seems to have finally caught up with reality. Falling inflation and stronger wage growth mean they are now more likely than not to feel confident in their personal financial situation.
“This is good news for the economy, which is starting to benefit from consumers’ increased propensity to spend, and bodes well for retailers who have had a number of tough years in the wake of the economic downturn.”
Download the second ‘Where’s Britain Spending?’ report from Barclaycard at www.barclaycard.com/spendreport
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