The story of consumer spending in February is one with two contrasting narratives. Card spending was sluggish, with growth of just one per cent year-on-year in February. That represented a drop of 0.9 per cent from January’s figure of 1.9 per cent and was way down on the latest Consumer Price Index inflation rate of 3.9 per cent.
This sits in contrast with consumer confidence, which saw all four measures improve in February. Most strikingly, confidence in household finances has reached the highest-level Barclays has seen since it started tracking this measure in 2015, at 75 per cent, a five-point increase on January’s figure.
Elsewhere, there were big gains in the technology sector, which bucked the trend in an anaemic growth month for retail, and continued growth for health and beauty as the UK’s consumer tried to lock in some healthy habits ahead of summer…
Confidence up as consumers get their finances in order
Consumer confidence picked up in February. As well as Barclays’ research showing record levels of confidence in household finances, consumers are feeling more confident in their ability to spend more on non-essential items, ability to live within their means and job security.
Essential spending fell by -1.0 per cent from where it was in January, which, suggesting that this robust confidence comes from the public using the early weeks of 2025 to get their financial priorities in order for the months ahead, and, having done the work, feel optimistic they are in a position to manage their money.
At least two in five (40 per cent) of consumers told us they have been finding ways to save amidst increasing costs.
Speaking about this, Will Hobbs, Head of UK Multi-Asset Wealth at Barclays, said: “The outlook for the UK economy remains better than widely anticipated. Much of the prospective uncertainty continues to rest uneasily on assumptions that the decade past must be prologue. Aggregate household financial strength allied to positive real wage growth and a gathering industrial revolution are all reasons to think that the path ahead may be a little brighter.
Always be prepared
It seems that financial spring cleaning has not only boosted confidence in household finances, but also in the strength of the economy more generally. Confidence in the UK economy is up four percentage points month-on-month, while consumers are also more confident about the strength of the global and European economy.
Alongside increased confidence, we are seeing increased consumer concerns too. Almost 90 per cent of respondents told us they are concerned about rising household bills, with water, energy and council tax amongst the essential costs set to increase in April. To add to this, concerns about increased inflation now sit at 88 per cent, their highest level since September of 2023.
A bigger bang for their buck
Consumers’ quest for value continued at pace, with 67 per cent of respondents saying that they are actively looking for ways to get better value from their weekly shop. Of this figure, 52 per cent are seeking out discounted products, 57 per cent are making use of loyalty schemes, and 49 per cent are shopping at discount supermarkets.
Over one in five (21 per cent) told us they are tracking their spending to spot areas where they can save money, and the same number plan to review their service and utility providers to ensure they’re getting the best deals.
Speaking about this, Karen Johnson, Head of Retail at Barclays, said: “Shoppers are clearly seeking more bang for their buck, while prioritising healthy habits, and finding a balance between caution and comfort ahead of the upcoming increases to household bills.”
Upgrades in order as electronics enjoys bumper month
Much like the wider economic trends, February’s retail picture was a mixed one. Growth across the sector was marginal at 0.6 per cent, which is down from January’s 2.8 per cent, but one area bucked the trend significantly.
Spending on electronics enjoyed its greatest increase since 2021, at 6.7 per cent. This might be explained by many items bought between 2020 and 2021 now reaching the end of their natural lifecycles, as well as the new launch of the iPhone 16E.
Always read the label
Finally, as the warmer months approach, 27 per cent of UK consumers have told us that they are planning to focus more on healthy eating. The same proportion of respondents told us that they are more likely to visit shops and restaurants that offer “healthier” options, a figure which increases to 45 per cent for those aged 18-24, showing the demand for health and wellness benefits remains strong.
To find out more about how Barclays sources its data and research, and how it is available for use from clients, you can visit our dedicated page.
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