Consumer spending grew just 5.9 per cent in February, as Brits continue to cut back on non-essential spending to offset rising food price inflation

• Growth of supermarket spending slowed, as consumers continued to find ways to reduce the cost of their weekly shop
• Produce shortages are impacting grocery shopping behaviour, with tomatoes, eggs, peppers, cucumbers and lettuce the items most difficult to source
• Spending on public transport jumped 22.6 per cent, as commuters locked in rail fares ahead of the 5 March ticket price hikes
• Three in 10 Brits will cut back on Easter celebrations this year, with one in four planning to spend less on Easter eggs
• The Barclays report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending

Consumer card spending grew just 5.9 per cent year-on-year in February, below the latest CPIH inflation rate of 8.8 per cent, owing to a reduction in discretionary purchases amidst the ongoing the cost-of-living squeeze. Growth rates were also impacted by the lifting of Omicron Plan B restrictions last year, which caused a spike in spending due to pent-up demand, bringing down this year’s figures.

Data from Barclays, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on groceries increased just 6.6 per cent in February – well below the latest food price inflation figures – as almost seven in 10 (68 per cent) Brits say they are looking for ways to reduce the cost of their weekly shop.

Almost half of these shoppers are cutting down on luxuries or one-off treats for themselves (49 per cent), while a similar proportion are buying more budget / value ranges (48 per cent) and making a shopping list so they only buy what they need (46 per cent).

Brits are also switching up where they shop in order to save money. Of those trying to cut costs, a third (34 per cent) are shopping at multiple supermarkets to source a range of deals, and three in 10 (30 per cent) are shopping in larger supermarkets, because they tend to have lower prices than smaller stores.

Salad Crunch

Food shortages are also influencing grocery shopping habits, with one in two (51 per cent) Brits noticing that some shelves in supermarkets are considerably emptier than normal. Over a third (35 per cent) has found they are less able to buy the items they need because of these shortages, while a similar proportion (33 per cent) has seen supermarkets restrict the amount of certain items they can buy. Tomatoes (43 per cent), eggs (34 per cent), cucumbers (22 per cent), peppers (19 per cent) and lettuce (16 per cent) are the top items shoppers have seen shortages of recently.

Falling Fuel, Rising Rail

Spend on fuel increased just 5.0 per cent year-on-year – likely due to falling petrol and diesel prices, as well as the uplift in car travel seen in February 2022, brought on by the easing of Covid restrictions and the end of work-from-home guidance. Meanwhile, spending on public transport saw a sizeable uplift (22.6 per cent), as commuters locked in fares ahead of the recent 5.9 per cent increase in train ticket prices, which came into effect on 5 March.

Discretionary Spending Freeze

As households switched on or turned up their heating amidst the cold weather, spending on utilities grew 43.2 per cent, with two thirds (67 per cent) of consumers consciously trying to save energy at home.

In response to rising household bills, nearly six in 10 (58 per cent) are cutting down on discretionary purchases, with spending on non-essential items seeing a markedly smaller year-on-year uplift (5.5 per cent) than in January (10.4 per cent). The slower growth is also because last month’s figures were inflated by Brits having had fewer opportunities for non-essential spending in January 2022, during the Plan B restrictions.

Card spend on clothing (-1.2 per cent) was also impacted by last year’s Omicron guidelines – the category saw a considerable uplift in February 2022 as Brits bought new outfits to celebrate the end of restrictions, which 2023 couldn’t match. In addition, the data shows that 65 per cent of the shoppers who are cutting back on discretionary purchases are reining in spending on new clothing and accessories.

Pent-up demand for eating and drinking out in February last year, combined with the impact of ongoing inflationary pressures, meant restaurants also saw a decline (-3.0 per cent), while pubs, bars & clubs saw a considerably smaller rise (7.7 per cent) than in January (18.1 per cent) – although it’s worth noting that January’s figures were also inflated by the Plan B restrictions last year.

However, as consumers continue to seek out bargains, discount stores were a bright spot, rising slightly faster than in January (5.5 per cent versus 4.2 per cent).

Insperiences also benefitted from the release of new boxsets such as ‘The Last of Us’ and series four of ‘You’, plus blockbuster hit “Black Panther: Wakanda Forever”, which fuelled a 2.2 per cent rise in spending on digital content and subscriptions – the first growth for the category since November 2022.

Super Dupe’r Savings  

In an effort to save money, over a third (34 per cent) of consumers are buying ‘dupes’, otherwise known as affordable versions of more expensive, popular products. The most popular items shoppers are buying ‘dupes’ of are food and drink products (68 per cent), clothing (28 per cent) and make-up and beauty products (23 per cent).

Egg-onomical Easter

The cost-of-living squeeze is set to impact Easter this year, with three in 10 (30 per cent) Brits aiming to reduce their Easter spending due to rising costs. Of those marking the occasion, a quarter (25 per cent) will be spending less on Easter eggs, one in five (22 per cent) is scaling back Easter holiday plans, and 28 per cent intend to spend less on Easter meals out (28 per cent).

Despite this, consumer confidence in household finances remains steady at 64 per cent, while optimism in the future of the UK economy has increased slightly to 24 per cent – up from 21 per cent last month.

Esme Harwood, Director at Barclays, said: “Several categories saw their growth taper off last month, especially those in the hospitality & leisure sector. This is partly because they couldn’t match the pent-up demand witnessed at the end of last year’s Plan B restrictions, and also due to the ongoing cutbacks brought on by the cost-of-living squeeze.

“The recent fruit and veg shortages are forcing Brits to consider alternatives for their weekly shop, as they continue to look for savvy ways to offset rising food price inflation. Popular trends this month include buying ‘dupes’ of popular products, shopping at discount stores, and limiting Easter spending.”

Silvia Ardagna, Head of European Economics Research at Barclays, said: “The UK economy flirted with a recession in the second half of last year as real GDP declined in Q3 and was virtually flat in Q4. Persistent elevated inflation continues to take a toll on spending, as indicated by today’s figures, which could prolong the headwinds.

“However, some survey indicators for consumer confidence, and the recent business activity in the manufacturing and services sectors both point to tentative signs of a rebound. The labour market remains tight, with wage growth too strong for the Bank of England to stop hiking. We expect an additional 25bp increase to the Bank rate in March to 4.25 per cent.”

ENDS

Notes to editors

Established in 2014, Barclays issues a monthly press release commenting on consumer spending trends.

Since January 2023, this report has been renamed The Barclays Consumer Spending Index. The methodology and data sources remain unchanged. These sources include Barclays debit card and Barclaycard credit card transactions, as well as non-card payments (e.g. direct debits) to calculate spending on utilities.

Across its issuing and acquiring businesses, Barclays sees nearly half of the nation’s credit and debit card transactions, which provides us with unique insight into UK consumer spending. This press release is based on consumer card spending data from Barclays’ issuing business – i.e. Barclays debit card and Barclaycard credit card transactions. It relates to the period 21^st January 2023 to 17^th February 2023. It is compared with 22^nd January 2022 to 18^th February 2022.

The utilities spend growth in this press release is calculated using both credit and debit card transactions, as well as non-card payments (e.g. direct debits). It is based on the first 13 billing dates of February 2023 vs. the first 13 billing dates of February 2022. Please note that utilities are not part of the calculations for Overall, Essential and Non-Essential spend growth, quoted in the table below, as these are based solely on debit and credit card transactions, and utilities are excluded.

The consumer confidence survey in this press release was carried out between 17^th and 21^st February 2023 by Opinium Research on behalf of Barclays. The data regarding food shortages was obtained from a separate consumer confidence survey which was carried out between 24^th and 28^th February by Opinium Research on behalf of Barclays. For each survey there were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, and income group.

For more information, please contact please contact Oliver Palca at oliver.palca@barclaycard.co.uk or Alejandra Quintela at alejandra.quintelasanchez2@barclays.com

About Barclays

Barclays is a British universal bank. We are diversified by business, by different types of customer and client, and geography. Our businesses include consumer banking and payments operations around the world, as well as a top-tier, full service, global corporate and investment bank, all of which are supported by our service company which provides technology, operations and functional services across the Group. For further information about Barclays, please visit our website home.barclays.

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