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Record expenditure on essential items drives 4.4 per cent uplift in consumer spending in January

Mon Feb 06 18:59:00 EST 2017

  • Consumer spending grew 4.4 per cent in January, boosted by big increases in the amount households spent on essentials (5.8 per cent)
  • Petrol forecourts (15.3 per cent) and supermarkets (2.9 per cent) both saw spend growth jump as price rises filtered through to consumers
  • Falls in spending on electronics (-3.4 per cent) and department stores (-1.6 per cent), resulted in growth on non-essentials (4.0 per cent) decreasing for the fourth consecutive month
  • Consumers’ confidence in household finances dips to post EU-referendum level despite confidence in the UK economy holding up

Consumer spending continued its bull run in January, growing by 4.4 per cent year on year, as inflationary pressures led to more being spent on petrol and in supermarkets.

Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows that after a lull in December, double digit growth in petrol spending (15.3 per cent) and the highest growth in supermarket spending in two years (2.9 per cent) fuelled a strong start to the year by consumers.

This drove up spending on ‘essential’ items by 5.8 per cent, the highest level since Barclaycard started reporting on consumer spending in 2012. In-store spending was also boosted as a result, to 1 per cent, up from the 0.3 per cent growth recorded in December.

Uncertainty over how the UK economy might fare in the year ahead saw households row back on spending in discretionary categories, with airlines (-1.3 per cent), electronics (-3.4 per cent) and department stores (-1.6 per cent) all seeing falls. This lead to a fall in the level of growth of ‘non-essential’ spend to 4 per cent – the fourth month in a row it has decreased, with it now lower than the average 4.6 per cent of 2016.

Spending on entertainment (8.3 per cent) also recorded below double-digit growth for the second consecutive month, significantly lower than the 14.4 per cent uplift in January 2016. The category was propped up by robust spending in pubs (15.6 per cent) and restaurants (14.2 per cent), but dragged down by lacklustre cinema spend growth (5.8 per cent) which was up by just half the average level seen last year (10.5 per cent).

A prevailing air of caution amongst households helped discount stores buck the trend, with sharp growth of 10.5 per cent – the first double-digit increase in this category, which has been particularly strong over the last two years, since the EU referendum result was announced. This suggests a tightening of purse strings across non-essentials drove consumers to seek more value in everyday purchases.

Two thirds (66 per cent) of consumers say they are now more careful to seek out value for money when making purchasing decisions. This sits within a broader fall of perceived spending power, with just over half (54 per cent) of Brits saying they are confident in their household finances, down from 67 per cent who said the same 12 months ago.

At the same time, two thirds (66 per cent) say they think rising prices will increase their spending on essentials items when compared to 2016. Consumers are consequently planning adjustments in their household expenditure this year; over a third (36 per cent) say they are less likely to spend on social occasions including meals out and trips to the cinema than this time last year.

Concern about the wider implications of the weaker pound is also having an impact on consumers’ plans for the year ahead. One in five (21 per cent) expects to cut back on overseas holidays as a direct result of currency depreciation, while a third (32 per cent) of consumers say that sterling fluctuations will influence how confident they feel in the wider economy.

Paul Lockstone, Managing Director at Barclaycard, said:

“January’s uplift in spending represents a strong start to the year. Big increases in the amount spent at supermarkets and on petrol, coupled with careful spending across a number of non-essential categories, does however suggest that consumers are starting to feel the impact of inflation on their everyday lives.

“A sharp fall in consumer confidence compared to January 2016 and an increase in the proportion going to greater lengths to seek out value, is also quite telling. It suggests consumers are having to reshuffle their spending priorities for the year ahead with our research pointing to cutbacks in discretionary spend on holidays and entertainment.”

 

Y/Y Spend growth by category

Overall

Online

In-store

Clothing

3.3%

16.9%

-1.9%

     Family Clothing

4.7%

20.1%

-0.5%

     Shoe Shops

-1.4%

16.6%

-6.9%

     Women’s Clothing

1.5%

11.8%

-3.7%

     Men’s Clothing

-3.5%

5.3%

-7.4%

Restaurants

14.2%

21.3%

13.7%

Books, Newspapers & Magazines

98.4%

185.4%

14.3%

Auto Parts & Accessories

-1.2%

5.2%

-3.1%

Cinema, Theatre & Dance

5.8%

15.1%

-10.0%

Public Houses

15.6%

-14.0%

16.0%

Department Stores

-1.6%

7.7%

-3.8%

DIY Stores

-0.4%

16.0%

-2.1%

Travel Agents

-0.3%

4.2%

-5.1%

Airlines

-1.3%

5.4%

-27.2%

Supermarkets

2.9%

9.4%

2.5%

Petrol

15.3%

229.1%

15.3%

Gambling

-9.2%

7.8%

-34.8%

Vehicle Sales

-8.3%

44.4%

-8.8%

Hotels

11.2%

35.9%

5.4%

Auto Repair Shops

-4.4%

32.9%

-5.5%

Sports Shops

7.7%

15.3%

5.1%

Furniture Stores

13.6%

8.7%

14.6%

Telecoms

15.2%

40.6%

2.4%

Household Appliances

0.2%

13.9%

-5.5%

Jewellers

3.9%

18.7%

2.2%

Sports and Games Establishment

2.4%

7.3%

-0.5%

Garden Centres

2.2%

14.4%

0.8%

Discount Stores

10.5%

36.3%

6.3%

Gift Shops

-2.7%

-13.7%

0.9%

Floor Covering Stores

0.7%

11.0%

-0.1%

Tourist Attractions

5.2%

7.0%

4.0%

Amusment Parks

45.7%

78.2%

37.2%

Aquariums

-17.0%

-52.6%

-4.1%

Electronic Stores

-3.4%

7.1%

-7.3%

Overall

4.4%

14.3%

1.0%

* For Furniture stores and Books, Newspapers, Changes to categorisation have lead to significant changes in the growth figures which are not reflective of any real growth in those categories.

Online share of spend

Clothing

31.2%

Travel Agents

53.5%

Average Transaction Value

Overall

-5.4%

Clothing

1.4%

Airlines

-7.3%

Restaurants

-7.6%

Supermarkets

-4.5%

Petrol

3.9%

Number of Transactions

Overall

10.3%

Clothing

1.9%

Airlines

6.5%

Restaurants

23.7%

Supermarkets

7.7%

Petrol

11.0%

For more information please contact Charlotte Brocklebank on 07725 683214 or  charlotte.brocklebank@cohnwolfe.com

* Opinium Research carried out an online survey of 2,001 UK adults aged 18+ from 15th to 17th of December 2016. Results have been weighted to nationally representative criteria.
* The data in this release relates to 26th December 2015 and compares it to 26th December 2014.


For more information please contact Charlotte Brocklebank on 07725 683214 or  charlotte.brocklebank@cohnwolfe.com

* Opinium Research carried out an online survey of 2,001 UK adults aged 18+ from 15th to 17th of December 2016. Results have been weighted to nationally representative criteria.
* The data in this release relates to 26th December 2015 and compares it to 26th December 2014.



For more information please contact Linda Yang on 020 3555 5586 or SiyuanLinda.Yang@barclaycard.co.uk

 


* Opinium Research carried out an online survey of 2,001 UK adults aged 18+ from 15th to 17th of December 2016. Results have been weighted to nationally representative criteria.
* The data in this release relates to 26th December 2015 and compares it to 26th December 2014.


For more information please contact Tom Foxton on 0207 116 7285 or tom.foxton@barclaycard.co.uk.

The January confidence data is from YouGov Plc. Total sample size was 1,643 adults. Fieldwork was undertaken between 23rd - 24th January 2017. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).