Consumer spending growth held steady in February – up 3.8 percent year-on-year and in line with the three-month rolling average (3.9 percent) – as consumers made small adjustments to their budgets to make room for the ‘nice-to-haves’.
Data from Barclaycard shows that supermarket spending (3.2 percent) returned to levels seen over the past six months after a spike of 4.4 percent in January. This kept expenditure growth on essentials, of which supermarket spend is a major component, to 3.4 percent. As consumers continued to prioritise the ‘experience economy’, spending on non-essentials reached 3.8 percent.
Entertainment performed strongly at 8.6 percent. This was bolstered by cinema and theatre spending rebounding from five months of contraction to rise 7.4 percent year-on-year, as Black Panther and the second release of tickets for the musical Hamilton boosted purchases at the box office.
Restaurants and pubs remained healthy at 9.7 percent and 10.0 percent growth respectively.
Continuing the trend of consumers seeking out experiences, travel spending jumped 7.4 percent year-on-year – the highest level seen since December 2016, driven by a strong increase in airlines (6.8 percent). This growth could be set to continue as one in four consumers (25 percent) say they plan to spend more on holidays in the month to come.
However, Brexit continues to be a cause for concern, with half of consumers (50 percent) worrying that the outcome of negotiations will leave them worse off than they are now – a rise of four percent compared to the month before.
More generally, just over half of consumers (54 percent) feel confident in their household finances, in line with January’s lacklustre levels. Rising prices are still causing many to feel the pinch: four in 10 (39 percent) Brits report they have less money to spend now than they did this time last year. Of these, two-thirds (67 percent) say it is because their weekly shop seems more expensive than it used to be.
Paul Lockstone, managing director at Barclaycard, said: “This is the third consecutive month that we’ve seen household spending growth above the prevailing rate of inflation suggesting that, while consumers remain cautious about their household finances, they continue to strike a balance between spending on essentials and on luxuries, whether that’s a holiday abroad or tickets for the latest blockbuster.
“With a year to go before Brexit, consumers are cautious about the potential ramifications of whatever settlement the UK achieves, and half of us fear that the outcome will leave us worse off than we are now. As negotiations continue it’s likely that this will continue to weigh on sentiment.”