Consumer card spending slowed to 1.6% growth in April, down from 1.9% in both March and February, and below the latest CPIH inflation rate of 3.8%. While consumer confidence in household finances rose to its highest level in over three years, a slowdown in food price inflation and cutbacks on food and drink led to a decline for restaurants and the smallest uplift in supermarket spending since June 2022. Meanwhile, cold and wet weather dampened retail sales, but Easter and summer holiday bookings boosted pubs, entertainment and international travel.
Brits cut back on spending on eating and drinking out in April, with restaurants once again experiencing a downturn, falling further into decline at -13.1 % (in comparison to -12.6% last month). Meanwhile, growth in spending on takeaways and fast food remained flat, at 3.0%.
This comes as half (49%) of Brits say they are concerned about how much they spend on food and drink, with the same proportion making the effort to cut back on discretionary spending (49%). Of this group, the majority are spending less on dining out and ordering takeaways, both at 54% respectively. One in four (24%) say they are cutting back on coffee or drink subscriptions.
In an effort to control spending, 58% of Brits have openly discussed aspects of their finances with loved ones – otherwise known as ‘loud budgeting’ – with consumers most often talking about their goal to cut back on takeaways (29%) and restaurants (25%).
Supermarket savings surge
Despite falling food price inflation (down from 5.0% to 4.0%), a record 73% of Brits are actively looking for ways to reduce the cost of their weekly shop – the highest percentage since Barclays started tracking in January 2023 – as grocery spending growth reached its lowest level (1.0%) since June 2022 (-0.8%). More broadly, spending on essential items grew just 1.7% year-on-year in April, the lowest rise so far this year.
Two in five (44%) supermarket savers are avoiding impulse buys at the checkout, while 37% are stockpiling their go-to products when they are on offer, and three in 10 (29%) are batch cooking to save money. Meanwhile, more shoppers have noticed supermarket products running out of stock, at 60% (vs. 50% last month), with fruit and vegetables, and eggs and dairy emerging as the most cited items impacted.
Consumer confidence climbs
Despite the overall slowdown in spending growth, Brits’ confidence in their ability to manage their household finances reached its highest level since November 2021, at 71%. Consumers’ confidence in their ability to live within their means also improved, increasing by two percentage points month-on-month to 74%. Confidence in their ability to spend more on non-essential items reached 56%, up from 55% in March.
Wet and windy April puts pressure on retailers
Overall retail spending contracted by -0.1%, marking the first month of decline for the category since September 2022, as in-store shopping was hampered by April’s cold snap. Face-to-face retail (excluding groceries) fell by -2.5%, and clothing sales dropped by -2.1%. However, pharmacy, health & beauty retailers bucked this trend, seeing a 4.9% increase, boosted by a number of macro factors, such as the “lipstick effect”, the wellness boom and viral makeup and skincare videos.
Surge in subscription spending
The launch of new TV series such as ‘Baby Reindeer’, ‘Ripley’ and ‘Fallout’, along with higher subscription fees and stricter rules around password sharing introduced by some streaming companies, led to a noticeable increase in spending on digital content and subscriptions, up 10.6% in April, compared to 7.7% in March.
Meanwhile, more than six in 10 (61%) consumers say they are concerned about the rising costs of digital content and subscriptions, likely in response to recent announcements of price increases across the category.
Fun-seekers prepared to dodge dynamic pricing
Spending on entertainment grew 3.2% last month, on par with March’s growth (3.1%), as families spent on leisure during the half-term break.
This rise in entertainment spending comes as 56% of Brits say they have noticed that tickets for events, attractions and museums have increased in price over the past year, with a similar proportion (57%) saying they are concerned about this trend.
A quarter (25%) of Brits said that if an attraction had ‘dynamic pricing’ in place – where ticket prices change in response to factors such as weather and demand – they would only visit at off-peak times. A similar proportion (23%) would seek out free alternative attractions, such as parks or certain museums, if dynamic pricing is in place.
Holidays abroad outshine staycations
Travel agents had another positive month, once again rising 7.1%, as holidaymakers booked summer getaways. However, hotels, resorts and accommodation saw their first decline (-0.7%) since May 2023. A third (32%) of consumers say they’re prioritising holidays abroad over staycations this year, with almost two fifths (39%) of this group hoping to escape the wet and cold weather in search of some sunshine.
Housing costs accelerate while services charges sting
UK spending on rental and mortgage payments rose 3.6% year-on-year in April, ending the three-month slowdown in spending witnessed from January to March. Reassuringly, growth remains below February’s figure (4.7%), and also below the 12-month average (6.5%), indicating that costs are still heading in the right direction over the longer term.
Service charges and ground rent increases have become an unexpected burden for many affected homeowners, as just over a third of payers (37%) regard these costs as affordable. Meanwhile, on top of the high price tag, most leaseholders feel blindsided by the charges, as just a third (33%) recall being made aware of the costs before purchasing their property, and only 23% saying they understood the rate at which the costs would increase.
On top of affordability, level of service is a growing issue as leaseholders see few improvements to their properties despite the premium – only 13% feel they get good value for money, and even fewer (10%) believe the money from their fees is spent effectively. Nearly a fifth (17%) of those paying service/ground rent fees are also concerned they won’t be able to sell their homes because of the charges.
DIY down as consumers cut costs
Brits are trying to cut down on their household costs, with 40% saying they will not spend on their home or garden ahead of the summer. Many are opting to postpone renovations or home improvements, as consumer card spending on household categories such as homewares, electronics and DIY fell by -4.1% in April.
Karen Johnson, head of retail at Barclays, said: “Retailers were hopeful that discretionary spending would bounce back by mid-year, buoyed by falling inflation and the prospect of better weather. While improving consumer confidence offers a ray of hope for the retail and hospitality industries as the summer season approaches, many retailers have adjusted their expectations, anticipating no real recovery until the autumn.”
Mark Arnold, gead of savings and mortgages at Barclays, said: “Consumers and lenders alike are anticipating a drop in interest rates this year, but optimism is understandably tentative as the market is still feeling the effects of last year’s volatility. Our data shows that Brits are still facing higher rent and mortgage payments, although costs are still slowing down over the longer term.”
Jack Meaning, chief UK economist at Barclays, said: “With inflation expected to have dropped back to 2 % in April, and with many anticipating a boost from the National Living Wage increase, it is encouraging to see consumer confidence picking up. Given the long squeeze consumers have faced, it may take time for this to translate into stronger discretionary expenditure, but easing interest rates in the second half of this year should spur consumers’ confidence and spending.”
