Sector sees ‘boost’ as card spending up 7.6% in July

Spending on non-essential items grew 5.6%, giving the hospitality and leisure sector a “boost”, Barclaycard stated.

The figures, based on almost half of the nation’s credit and debit transactions, also showed the sector had seen a 4.5% increase in the number of transactions made.

Barclays UK economist Abbas Khan said: “Over the first half of 2023, high inflation rates have weighed on real household disposable incomes and constrained consumption.

“On the bright side, this headwind is expected to abate over H2 as inflation in essential categories such as energy and food is set to ease.

Discretionary spending 

“However, offsetting this, more households are set to experience higher mortgage costs as they refix onto higher rates.”

While still in decline, restaurants improved “considerably”, down 2.5% compared to 8.2 per cent in June.

Overall consumer card spending grew 4% year-on-year, below the latest headline inflation rate of 7.3% and slightly than the 5.4% seen in June, attributed by Barclaycard to consumers continuing to be “selective” with discretionary spending.

The entertainment sector saw a 1 5.8% increase, largely driven by live events, with one in 10 consumers cutting back on other expenses to afford more outings.

Elsewhere, the data showed spending in supermarkets rose 5.2% during this period, less than the 9.8% seen in June, with consumer concerns regarding rising food prices at 91%.

Takeaways and digital content and subscriptions rose 9.2% and 9.9% respectively amid wet weather, while travel spending was also up.

Major concern 

Khan added: “While we do not expect a consumer recession in the coming quarters, growth is likely to be meagre.”

Concerns around food prices and the rising cost of living also impacted economic confidence as just one-in-five (21%) felt confident in the strength of the UK economy, down 2% month-on-month.

In addition, more than one in five Brits (22%) also noted some alcoholic drinks purchased in the off trade had “become weaker”.

Barclays director Esme Harwood said: “With value-for-money still a major concern at the supermarket, eagle-eyed consumers are also spotting signs of “shrinkflation” on alcoholic drinks.

“This could be due to manufacturers making changes to their products ahead of the recent changes to alcohol duty, which mean that drinks are now taxed according to strength rather than type.”