Consumer card spending grew 1.4% year-on-year in July, up from -0.1% in June, but remaining below the latest CPIH inflation rate of 4.1%. Essential spending declined -0.7%, however discretionary spend rose by 2.4% – an increase from June’s 0.8% growth – as changeable weather led shoppers to spend on both sunny and rainy-day activities and items.
The overall retail category had a positive month, up 1.9%, after marginal growth of 0.2% in June. This was propped up by clothing which grew 4.2%, its greatest increase since September 2024. This comes as almost one in five (16%) UK adults said they bought more summer clothes and accessories in July, while a quarter (26%) said July’s changeable weather impacted their spending decisions.
The growth in online retail spending (excluding groceries) reached 4.9%, up from 2.4% in June. Shoppers made the most of discounted items and sales events, with a fifth (21%) spending more than they had expected and 11 % planning ahead by purchasing early Christmas gifts.
Pharmacy, health and beauty performed strongly, up 9.8%, while continuing to benefit from the enduring post-COVID “lipstick effect” – where shoppers turn to small and affordable luxuries to boost their mood. Furniture store sales also increased by 6.7%, marking the category’s eighth consecutive month of growth.
Confidence in household finances holds strong
Confidence in the strength of the UK economy dipped once again in July, falling three points month-on-month, to 22%, the lowest level seen since January (21%), having reached a 2025-peak in May, at 28%. Despite this, consumers remain confident in their ability to live within their means. This measure held firm at 75%, just one point below the 76% recorded in June, and five percentage points higher than July 2024 (70%). Confidence in household finances also stabilised at 72%, down marginally from 73% in June, but up seven percentage points year-on-year, from 65%.
A focus on budgeting is likely contributing to the stability of these figures. A third (34%) are building a savings buffer in case costs rise (equal to June), while seven in 10 (71%) have been making financial adjustments in light of the current economic outlook (up two points month-on-month).
Gen Z leading AI money management
Amid the meteoric rise of artificial intelligence tools such as ChatGPT and Gemini, consumers are making use of AI to help with managing their money. Over a third (35%) of UK adults have used AI tools to help them plan, budget and/or analyse their spending, rising to seven in 10 (69%) among Gen Z.
Gen Z also turn to AI the most frequently for money management, with almost half (45%) of users reporting weekly use and 84% using the tools at least once month. Across all age groups, the most popular use cases are to: compare prices, discounts and deals (12%); research products and services (11%); and create budgets (10%).
Top uses of AI for money management | |||||
All ages | Gen Z (18-27) | Millennial (28-43) | Gen X (44-59) | Over 60s | |
Planning, budgeting and/or informing spending decisions (total) | 35% | 69% | 58% | 24% | 11% |
Comparing prices, discounts, deals | 12% | 20% | 19% | 10% | 4% |
Researching products and services | 11% | 16% | 21% | 8% | 4% |
Creating a budget | 10% | 21% | 19% | 4% | 2% |
Setting financial goals | 10% | 21% | 16% | 6% | 2% |
Creating meal plans/shopping lists | 9% | 18% | 19% | 5% | 2% |
Tracking/analysing spending habits | 7% | 15% | 13% | 4% | 1% |
Creating a holiday itinerary/budget | 7% | 13% | 12% | 5% | 2% |
Live shows lift entertainment
Entertainment spending was up 7.4% in July, below June’s 8.0%, but ahead of the overall hospitality and leisure sector’s 2.7% growth. Spending on live shows and concerts increased 9.3%, above the 2.5% recorded in June. The busiest day of the month for the category was 10th July, when general release tickets to Lewis Capaldi’s 2025 tour went on sale. Cinema spend, up 1.6% overall, peaked on 5th July, following the release of Jurassic World Rebirth a few days earlier, on 2nd July.
Small screen viewing resulted in an 8.0 % uplift for digital content & subscriptions, helped by nostalgic fans streaming the live action remake of Lilo & Stitch and highly-anticipated sequel Happy Gilmore 2.
Karen Johnson, head of retail at Barclays, said: “The summer sales, changeable weather and shoppers seeking the “feel-good factor” led to a strong July for retailers, particularly among beauty, clothing and furniture stores. While confidence in the UK economy remains subdued, prudent money management, supported by the growing popularity of AI tools to help with budgeting is contributing to a continued resilience in personal and household finances”.
Will Hobbs, managing firector, Barclays Private Bank and Wealth Management, said: “Despite what public debate might suggest, there are a number of reasons to be positive about the current performance of the UK economy. Real (inflation adjusted) household incomes continue to grow, while the consumer’s balance sheet remains in good order in aggregate. July admittedly only saw marginal spend growth, but the trend is healthier.
“Confidence is the key to unlocking the UK’s still restrained spending power. While this is clearly a difficult factor to forecast, longer history suggests a bias towards optimism is well supported. Doom sells, but the outlook for the UK has more going for it than widely realised, with a revitalised Europe particularly important given the role of proximity in economic growth.”
2025 consumer confidence measures
Jan | Feb | Mar | Apr | May | Jun | Jul | |||||||||
Household finances | 70% | 75% | 70% | 70% | 67% | 73% | 72% | ||||||||
Job security | 47% | 48% | 46% | 48% | 47% | 50% | 48% | ||||||||
Non-essential spending | 56% | 59% | 58% | 60% | 56% | 59% | 58% | ||||||||
Ability to live within means | 74% | 77% | 73% | 74% | 74% | 76% | 75% | ||||||||
Strength of UK economy | 21% | 25% | 23% | 24% | 28% | 25% | 22% | ||||||||
Strength of European economy | 25% | 28% | 30% | 27% | 30% | 27% | 25% | ||||||||
Strength of global economy | 21% | 26% | 24% | 21% | 26% | 23% | 21% |
Overall growth figures
Spend Growth | Transaction Growth | |
Essential | -0.7% | -0.3% |
Non Essential | 2.4% | 1.4% |
OVERALL | 1.4% | 0.7% |
Retail | 1.9% | 1.6% |
Clothing | 4.2% | 6.1% |
Grocery | 0.9% | 1.2% |
| 0.6% | -0.5% |
| 3.1% | 9.3% |
Household | 0.0% | 1.0% |
| -0.8% | -7.4% |
| -4.3% | 9.1% |
| 6.7% | 0.9% |
| 0.1% | -2.3% |
General Retailers | 3.1% | 2.9% |
| 6.8% | 5.1% |
| -7.4% | -2.0% |
| -2.7% | -2.3% |
Specialist Retailers | 4.0% | -0.5% |
| 9.8% | 0.5% |
| -1.3% | -1.1% |
| 1.3% | -1.5% |
Hospitality & Leisure | 2.7% | -0.7% |
Digital Content & Subscription | 8.0% | 3.9% |
…
