Barclays: retail recovery and enduring entertainment prop up non-essential spending, as consumers’ inflation concerns ease

Consumer card spending grew 0.7% year-on-year in October – less than September’s increase (1.2%) and below the latest CPIH inflation rate of 2.6%. Growth was propped up by spending on non-essential items, which climbed 2.1%, driven by the strong performance of entertainment, up 13.5%, and the recovery of retail, which recorded its third consecutive month of growth.

In October, essential spending saw its greatest fall (-2.2%) since April 2020 (-2.9%). Supermarket spending dipped -0.8%, as consumers’ concerns about food price inflation eased, down four percentage points to 84% compared to 88% in September.

Other confidence measures showed significant year-on-year improvements; confidence in household finances increased nine percentage points compared to last year, at 70% – on par with September. Similarly, 57% feel confident in their ability to spend on non-essential items, up five percentage points year-on-year.

Retail rebounds

Brits’ growing confidence was reflected in retail’s October performance. General Retailers were up 5.2% – the highest growth for the category since September 2023. Spending at department stores also rose by 4.7%, meanwhile, clothing saw a 1.9% boost, after growing 4.5% in September. This comes as new clothes and accessories were no longer cited as the number one cutback for shoppers limiting their spending – now at 48% (down from 55%), and overtaken by meals out and takeaways, both at 50% respectively.

Black Friday splits opinions

As retail continues to show signs of recovery, many shoppers are already planning ahead for Black Friday. Two in five (37%) say they intend to shop during the sales period this year, while a similar proportion (45%) say they prefer browsing Black Friday deals online, with just 16% preferring to shop in-store. Three in 10 (29%) have saved items in their online basket so they can monitor if they’re discounted on Black Friday, and a third (33%) are hoping to buy their Christmas presents in the sales.

Pointing to the changing nature of Black Friday – 33% of shoppers say the retail milestone is better for them now that it is spread out over a longer period, but two in five (39%) no longer look forward to the seasonal sales as much as they used to. Despite this, Black Friday spending increased 3.3% year-on-year in 2023, and has remained the busiest day for retail spending (excluding groceries) for five consecutive years.

Coldplay lifts entertainment spend to high note

Entertainment was another standout category in October, building on September’s strong performance, reaching 13.5% growth year-on-year. This boost was largely driven by Coldplay World Tour ticket sales. Digital content and subscriptions also grew 9.7%, as streamflation – the rising price of streaming services – continued, while popular programmes such as Rivals, Heartstopper, Nobody Wants This and Agatha All Along continued to encourage Brits to spend evenings indoors.

Belts tighten on dining in and out

In order to prioritise the things they love, cost-savvy Brits are still looking for ways to keep their budgets in check. Just under half (46%) plan to cut down on discretionary spending to save money, albeit a marginal decrease compared to September (49%). This group listed eating out at restaurants (50%), ordering fast food and takeaways (50%) and drinking at pubs, bars and clubs (41%) among their top cutbacks.

In October, spending on takeaways and fast food was flat, at 0.0%, down from last month’s 0.8% growth. Spend at bars, pubs and clubs also plateaued (0.0%), representing the lowest growth for the category since September 2022 (-0.5%).

‘Fun funds’ and 2025 getaways

Alongside spending on retail and entertainment, two fifths (46%) of consumers say there are treats and luxury purchases they continue to buy because they bring them joy, even when trying to budget, allocating on average £133 each month to these items. Sweets and pastries are still top of the treat list, chosen by 43%, while 25% say they continue to spend on both takeaway coffees and new clothes and accessories respectively.

Travel remains popular, up 6.7%, largely owing to growth at airlines (9.3%), as Brits book getaways abroad. The strong demand for travel was also highlighted by holidays ranking #1 in a list of discretionary spending priorities, chosen by 22% of respondents. Three in 10 consumers (28%) have already booked a getaway for 2025, with almost a quarter (23%) of these holidaymakers booking early to save money, while one in three (31%) will be visiting a new destination they’ve not been to before.

While still in growth, spending at travel agents fell slightly from September (7.8%, compared with 9.2%), possibly indicating that holidaymakers are taking a more hands-on approach to travel next year.

Karen Johnson, head of retail at Barclays, said: “The days may be getting darker and longer, but Brits continue to find the bright spots by prioritising the things they love.

“The drumbeat of incredible music artists performing here in the UK, such as Coldplay, means entertainment spending continues to climb, having reached 13.5% growth in October. Meanwhile, the small screen continues to draw Brits to cosier evenings in, cutting back on evenings out at pubs, bars, and restaurants, instead enjoying streaming and shopping from the comfort of home.

“We’ll be keeping a close on whether consumer confidence holds in November and in the run up to Christmas.”

Jack Meaning, chief UK economist at Barclays, said: “With price pressures continuing to ease and tentative signs that consumer confidence is improving once again, following what appears to have been a post-election dip, we think that the stage is set for real spend growth, as we move through the final quarter of the year, and look ahead to 2025.”

Overall growth figures