Consumer spending returns to modest growth
Consumer spending grew 2.9 per cent year-on-year in January, returning to modest growth following a dip in December. Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, shows that essential spending climbed to 6.4 per cent, the highest level for five months. Fuelling this was a strong performance from supermarkets, which saw their highest growth since April 2017 at 6.8 per cent.
Non-essential expenditure, on the other hand, saw an increase of just 1.7 per cent. Even the January sales were not enough to bring relief to retailers, as clothing and department stores experienced their fourth month of consecutive decline, contracting by 0.9 per cent and 0.6 per cent respectively. One of the reasons for this could be a change in sale shopping habits. Over half of UK adults (52 per cent) say the January sales are less important to them than they were two or three years ago and one in four (24 per cent) say they are losing interest because retailers now offer discounts throughout the year.
Consumers continue to remain cautious about their expenditure, with seven in ten (70 per cent) saying they have become much more careful to seek out value for money in the purchases they make. Furthermore, over half (54 per cent) of consumers say they are worried that a rise in the price of everyday items will impact their spending power in the near future. Looking at the wider picture, amidst ongoing political uncertainty, consumer confidence in the UK economy has dropped to 30 per cent.
Esme Harwood, Director at Barclaycard, said: “Despite a modest uplift in overall consumer spending, retailers continued to struggle as the traditional January sales period wasn’t enough to entice shoppers to spend. Looking forward, consumers will continue to prioritise value for money, especially as many have concerns about potential price increases on everyday essentials.”