Consumer spending sees muted growth in July
Consumer spending grew by 1.7 per cent year-on-year in July – representing a decline in real terms when accounting for inflation – following similarly muted figures in May and June.
Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, shows that essential spending contracted by 0.9 per cent as supermarkets and petrol both saw a decline of 0.7 per cent and 2.4 per cent respectively.
Non-essential spending, however, remained in positive territory at 2.4 per cent growth, bolstered by consumers continuing to spend on entertainment and experiences. Following the release of Disney blockbusters such as The Lion King and Toy Story 4 in cinemas, ticket sales showed strong growth of 14.8 per cent.
Meanwhile, restaurants enjoyed a 10.1 per cent uplift, as Brits took advantage of the long summer evenings by relaxing and dining out. Pubs saw growth of 5.6 per cent, a fairly modest rise compared to July 2018, when the heat wave and World Cup fever led to a boom in pub spending (up 16.8 per cent year-on year).
Travel grew by 2.6 per cent as airline expenditure bounced back from three consecutive months of decline to grow by 3.7 per cent, with many consumers taking advantage of discounting and the sales to enjoy a last-minute summer break.
Retail, on the other hand, continued to struggle, with department stores contracting by 3.9 per cent.
July’s overall figure followed similarly muted results from May and June, with consumer spending showing growth of 1.1 per cent and 0.9 per cent respectively.
This is reflected by a fall in consumer confidence, with just 29 per cent of UK adults feeling positive about the state of the UK economy. In addition, a quarter of consumers (23 per cent) now say they are uncertain about their job security – the highest this figure has been in over two years.
This unease about the economy and jobs may also be causing Brits to rein in their spending. Just 54 per cent are confident in their ability to spend on non-essential items – a drop of six percentage points since last month.
Furthermore, almost a third (32 per cent) say they are holding off on making a major purchase until the economy becomes more settled – indicating that consumers are cutting back on discretionary spending.
Esme Harwood, Director at Barclaycard, said: “Spending has remained relatively subdued over the past few months, with an underlying uncertainty about the wider economic and political landscape causing many to hold off making purchases on bigger ticket items.
“However, on a brighter note, box office hits such as The Lion King and Toy Story 4 have helped boost spending as consumers continue to prioritise dining out and enjoying trips to the cinema and theatre this summer.”