Consumer card spending rose 0.8% year-on-year in May, up from April’s -0.1% decline, but still below the latest CPIH inflation rate of 3.4%, according to the Barclays Consumer Spend report.
Essential spending climbed 0.7%, led by an 11.9% increase in fuel spending, while non-essential spending returned to growth, at 0.9 per cent, after falling -0.3% last month.
Spend in supermarkets fell -2%, while transactions dropped -3.9%. However, May’s sunny weather and the early bank holiday supported several seasonal categories, with spend in food and drink specialist stores up 4% and transactions rising 5.9%.
Consumers’ confidence in their household finances and ability to live within their means improved one percentage point each, to 65% and 70% respectively, while consumers’ confidence in their ability to spend on non-essential items grew to 52% (up from 49%).
Concerns about the impact of the Middle East on costs remain high, but have eased month-on-month, with a lower proportion of consumers concerned about food prices (82%, down from 84%) and rising energy bills (83%, down from 85%).
Two in three (65%) are making financial adjustments in response to current uncertainty, with this group limiting non-essential purchases (45 per cent), takeaways and meals out (42%) and energy use at home (38%).
Of those making the effort to cut discretionary spending, 35% say their top reason for doing so is to offset an increase in essential costs, while 34% cited building a savings buffer as their main motivation.
Julien Lafargue, Chief Market Strategist, Barclays Private Bank and Wealth Management, said: “May’s data offers an early sign that household demand may be stabilising, but the macro backdrop remains finely balanced. The key question now is whether improving confidence can be sustained, particularly if inflation remains sticky and interest rates trend higher.”
Karen Johnson, Head of Retail at Barclays, said: “The warmer weather and first May Bank Holiday gave consumers more reasons to spend in May, particularly on seasonal essentials, UK breaks and affordable ways to enjoy time with family and friends. Shoppers are still being careful, with many continuing to build savings and managing subscriptions more closely, but they are also finding room in their budgets for the things that feel good value, convenient or worth prioritising.”
