High street spending slowed during rainy August, while ‘Barbenheimer’ doubled cinema ticket sales

• ‘Barbie’ and ‘Oppenheimer’ led to a blockbuster month for cinemas, up 101 per cent
• International travel spending held up, while pharmacy, health & beauty stores were boosted by pre-holiday purchases
• High street and hospitality sales were hampered by wet weather in early August, as fewer Brits visited shops, restaurants and pubs
• Meanwhile, consumers are noticing that certain food and drink products have had premium ingredients reduced or downgraded, known as “skimpflation”
• 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 2.8 per cent year-on-year in August – noticeably lower than the latest CPIH* inflation rate of 6.4 per cent and July’s growth figure of 4.0 per cent – as rainy weather cast a cloud on the high street. However, entertainment provided a welcome boost, prompted by a surge in cinema ticket sales for ‘Barbie’ and ‘Oppenheimer’.

Spending on essentials saw just 1.0 per cent growth – the lowest uplift since April 2020 (-2.9 per cent), largely due to a sharp decline in spend on fuel (-20.1 per cent). Supermarkets and food and drink specialist stores also saw weaker spending growth (4.5 per cent and 4.9 per cent respectively) compared to July (5.2 per cent and 6.2 per cent respectively). This was impacted by the slower rate of food price inflation**, as well as consumers continuing to find ways to get more value or to reduce the cost of their weekly shop (67 per cent).

The majority of these supermarket savers are buying budget or own-brand goods over branded items, as well as cutting down on luxuries or one-off treats for themselves (both 52 per cent). A quarter (26 per cent) are only buying items that are discounted, and 12 per cent are removing some items when they get to the checkout, to avoid going over budget.

“Skimpflation” is shoppers’ latest scourge

Over half (52 per cent) of Brits have noticed that some of the food and drink products they buy have been downgraded in terms of quality or the quantity of premium ingredients, yet still cost the same or more than they used to – otherwise known as “skimpflation”. Within this group, the most frequently cited skimpflation examples include crisps (44 per cent), sweets and chocolate (43 per cent), and cakes and biscuits (36 per cent). A fifth also feel takeaways (22 per cent) and restaurant meals (20 per cent) are decreasing in quality without a corresponding fall in price.

The impact of “skimpflation” goes beyond food and drink: two fifths (41 per cent) have noticed that the standards of some of the (non-food) products and services they buy have been downgraded, yet still cost the same or more. These shoppers are most noticing the declining quality of clothing, chosen by 44 per cent, closely followed by toilet paper (43 per cent), and toiletries/cosmetics (37 per cent).

In addition, “Shrinkflation” continues to be front of mind for the majority of shoppers (84 per cent), with chocolate (54 per cent), crisps (47 per cent) and packs of biscuits (43 per cent) remaining the top products identified as being impacted by this ongoing trend.

‘Barbenheimer’ boosts blockbuster bookings

While the wetter weather, combined with the slowing rate of inflation, meant spending on non-essential items saw less growth (3.7 per cent) than July (5.6 per cent), there were some bright spots across the retail, hospitality and leisure sectors.

Entertainment continued to perform well (12.0 per cent), largely driven by a 101 per cent surge in cinema spending as Brits booked tickets to watch this summer’s biggest blockbusters – ‘Barbie’ and ‘Oppenheimer’. Meanwhile, spending at pharmacy, health and beauty stores held up at 5.2 per cent, likely boosted by holidaymakers buying suncream and other toiletries for trips away.

Nevertheless, it was another challenging month for clothing, which was down -0.7 per cent, albeit a less significant drop than in July (-3.1 per cent).

Memories over material things

A fifth (19 per cent) of Brits say that, despite the rising cost-of-living, spending on luxury items and/or experiences is still a priority, to maintain their desired lifestyle, with holidays abroad (44 per cent) and hotel stays (22 per cent) cited as the top purchases among this group.

To ensure they can afford to spend on memorable moments, 27 per cent of these shoppers are cutting back on takeaways and fast-food, while a fifth (19 per cent) are reducing costs associated with socialising.

At the same time, over half (52 per cent) of Brits are reining in discretionary spending due to rising household bills, with eating out at restaurants (61 per cent), new clothes and accessories (59 per cent), and ordering takeaways (58 per cent) emerging as the non-essentials most deprioritised.

This comes as takeaways and fast-food recorded a noticeably smaller uplift (6.4 per cent) compared to July (9.2 per cent), while the rainy weather in the first half of August also led to fewer Brits visiting the high-street. Restaurants (-5.8 per cent) fell further into decline from July (-2.5 per cent), while bars, pubs & clubs saw their lowest growth (2.8 per cent) since October 2022.

Spending on airlines (32.1 per cent) and travel agents (3.7 per cent) also remained in growth, yet the uplift was lower than in July (39.1 per cent and 7.8 per cent respectively), as the summer season drew to an end.

Christmas budgeting starts early

As Autumn begins, some Brits are already looking ahead to their Christmas shopping plans. Almost a third (31 per cent) expect this coming Christmas to be more expensive than last year, while a fifth (19 per cent) are worried about being able to keep up with outgoing costs. One in five (17 per cent) savvy savers has also started to put money aside to help fund their festivities.

Despite this, Brits’ confidence in their household finances and ability to live within their means has increased slightly (67 per cent and 72 per cent) compared to July (65 per cent and 70 per cent).

Esme Harwood, Director at Barclays, said: “The rainy weather impacted high street and hospitality venues in August, but Brits were still keen to spend on memorable summer experiences. The huge Box Office success of ‘Barbie’ and ‘Oppenheimer’ meant entertainment enjoyed another strong month, while holidays abroad boosted international travel and pharmacy, health & beauty stores.

“Shrinkflation – and now “skimpflation” – are increasing concerns for value-seeking shoppers. However, Brits’ confidence in their household finances is unwavering, suggesting they remain resilient in the face of these inflationary pressures.”  

Abbas Khan, UK Economist at Barclays, said: “Muted spending growth in August is in line with other data sources, such as soft PMIs and stalling consumer confidence, suggesting that the bite from monetary tightening is starting to be felt more acutely.

However, with further moderation in inflation and strong wage growth set to support real household disposable incomes, we continue to think the economy will avoid a recession in the coming quarters, even if growth is only set to be sluggish.”

ENDS

Notes to editors

*CPIH: Consumer Prices Index including owner occupiers' housing costs

**ONS annual inflation rate for food and non-alcoholic drinks rose by 14.9 per cent in the year to July 2023 – down from 17.4 per cent in June and from a high of 19.2 per cent in March, which was the highest annual inflation rate for over 45 years.

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 22^nd July 2023 to 18^th August 2023. It is compared with 23^rd July 2022 to 19^th August 2022.

The consumer confidence survey in this press release was carried out between 22^nd and 25^th August 2023 by Opinium Research on behalf of Barclays. 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 Dee Fallon at deirdre.fallon@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.

About Barclays Market and Customer Insights

Barclays Market and Customer Insights helps businesses keep up to date with spending trends, monitors their market position and enhances their understanding of customer behaviour, based on actual customer spending. For further information, please email contact-MCI@barclays.com.