UK consumers looking to cut festive spending
A cautious approach from Britain's consumers looks set to continue into the Christmas period, Barclaycard warned on Tuesday.
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Data from Barclaycard found that overall consumer spending growth slowed to 3.9% in September, compared to 4.5% in August and 5% in July.
Essential spending, which includes petrol expenditure, was 4.6%, against 6.9% in August and 8.7% in July. Supermarket spending was up 2.7%, down from August’s 5%, but petrol prices remained robust, ahead 8.9%.
Barclaycard – which sees nearly half of the UK’s credit and debit transactions – shoppers were now more concerned about the wider economy and the impact of rising fuel prices.
“We’ve seen spending return to a more modest level as consumers balance their budgets after a longer-than-usual summer of spend,” said Esme Harwood, director at Barclaycard. “Rising prices are having an impact on shoppers’ spending priorities, with more of their household budget devoted to everyday essentials such as petrol.
“A more cautious approach looks set to continue into the Christmas period as consumers remain conscious of the wider economic trends.” Nearly half of consumers surveyed said they were planning on spending less on Christmas than they did in 2017.
Barclaycard’s findings chimed with the monthly BRC-KPMG retail sales monitor, also published on Tuesday. The industry data showed like-for-like sales values were down 0.2% in September, slowing from 0.2% growth in August.
Laura Suter, personal finance analyst at AJ Bell, said: “Retailers already facing a tough time on the high street are not likely to see rosier time ahead, as Brits look to cut back their spending on Christmas.
“The troubles at House of Fraser, Debenhams and to a lesser extent John Lewis are shown in the fact that spending in department stores in September was almost 8% lower than the same month last year and has fallen every month for the past year.”
However, while consumers may be looking to tighten spending on the high street, spending on entertainment remained strong, at 11.6%, the strongest rise since June 2017. Barclaycard said the sector had been boosted by spending on ticket sales, pubs and restaurants.
Spending in furniture stores was ahead 6.2%, the highest this year. Overall clothing sales were just in positive figures, at 0.7%, but women’s clothing declined 3.5% as people put off buying winter items such as coats.