Consumer card spending grew just 1.0% year on year in May, the smallest rise since February 2021 and significantly lower than the latest CPIH inflation rate of 3.0%.
That’s according to the latest Barclays Consumer Spend Report, which combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending.
Consumer confidence took a hit in May following increases on a number of household bills including council tax and broadband the month before, with 87% worried about the impact on their personal finances.
This saw 44% say they are reducing their discretionary spending, citing ordering takeaways (54%) as their number one cutback. Over half (53%) of these consumers are also cutting back on eating out at restaurants.
As the rain continued to cast a cloud over the high street, overall retail spending fell -0.4% – the biggest drop since September 2022 – with in-store spending (excluding groceries) and clothing sales dropping by -2.6% and -1.0% respectively.
Spending at supermarkets grew just 0.3% – the lowest growth since June 2022 – as April saw food price inflation fall to its lowest annual rate (2.9%) since 2021. The downturn in supermarket shopping is also partly due to the comparison with May 2023, when spending on groceries surged due to Coronation bank holiday street parties and soaring food price inflation.
On a more positive note, 28% say they will spend more when the weather improves this summer. Two-fifths (39%) of this group plan to spend more on food and drink for picnics, a third (34%) say they’ll fork out on drinking and dining al fresco at pubs and restaurants, and 29% intend to buy barbeque supplies.
Karen Johnson, Head of Retail at Barclays, said: “Retailers faced a challenging May, yet the few sunnier days in the month did bring a welcome uptick in footfall. As consumers gear up to spend more with better weather, and with the Euros, Wimbledon, and Taylor Swift’s ‘Eras Tour’ on the horizon, there’s a brighter outlook for the coming months.”
