(IN BRIEF) Consumer card spending in the UK grew by 4.0% YoY in July, driven by the hospitality and leisure sector as Brits spent more on getaways, dining out, and entertainment like concert tickets. Spending on supermarkets grew at a slower rate (5.2%) due to reduced food price inflation, prompting shoppers to seek ways to reduce grocery costs. The entertainment sector experienced strong growth, particularly in spending on live events like Taylor Swift and Foo Fighters concert tickets. Despite concerns about rising food prices, some consumers are noticing “shrinkflation” or “drinkflation” effects on alcoholic drinks due to changes in alcohol duty.
(PRESS RELEASE) LONDON, 9-Aug-2023 — /EuropaWire/ — Consumer card spending grew 4.0 per cent year-on-year in July – less than the latest CPIH* inflation rate of 7.3 per cent and slightly lower than in June (5.4 per cent) – as shoppers continue to be selective about discretionary purchases. While clothing retailers fell back into decline after a surge in June, the hospitality & leisure sector received a boost as Brits spent more on getaways, eating and drinking out, and concert tickets for artists such as Taylor Swift and Foo Fighters.
Spending on supermarkets rose considerably less in July (5.2 per cent) than in June (9.8 per cent), as the rate of food price inflation continued to slow after peaking in March**. However, concern around rising food prices remains high at 91 per cent, leading seven in 10 (70 per cent) shoppers to look for ways to reduce the cost of their weekly shop – the highest percentage so far this year.
Of these value-seeking Brits, 13 per cent say they are having to remove some items at the checkout to avoid going over budget. To help save money, more than a third (35 per cent) are buying items in bulk because they cost less in the long-term, and four in 10 (41 per cent) are shopping at multiple supermarkets to source a range of deals. Concerns around food prices and the rising cost of living are also impacting economic confidence as just one-in-five (21 per cent) report feeling confident in the strength of the UK economy, down two per cent month-on-month in July.
From “shrinkflation” to “drinkflation”
Meanwhile, “shrinkflation” continues to impact grocery shoppers. A slightly higher proportion of Brits had noticed examples of “shrinkflation” in July (73 per cent) compared to June (70 per cent), with chocolate (56 per cent), crisps (49 per cent) and packets of biscuits (46 per cent) remaining the products most frequently cited as being impacted by this growing trend. As a result, a fifth (21 per cent) of the shoppers who have noticed signs of shrinkflation are switching to brands which haven’t changed the size of their products.
“Shrinkflation” is also affecting alcoholic drinks: more than one in five Brits (22 per cent) have noticed that some of the alcoholic drinks they buy – such as beers, spirits and tinned cocktails – have become weaker or contain less alcohol, yet still cost the same or more than they used to, otherwise known as “drinkflation”. This could be due to manufacturers changing their products ahead of the recent changes to alcohol duty introduced on 1 August, meaning that alcoholic drinks are now taxed according to strength instead of type.
Tour ticket triumphs and a surge for subscriptions
Spending on non-essential items grew 5.6 per cent year-on-year in July, with the hospitality & leisure sector enjoying a boost as Brits made the most of the summer. Bars, pubs & clubs saw growth of 7.6 per cent, while restaurants – though still in decline – improved considerably (-2.5 per cent) compared to June (-8.2 per cent).
The entertainment sector was a particular bright spot, seeing a significant boost of 15.8 per cent year-on-year. This was largely driven by spending on live events, with surges recorded on the pre-release dates for Taylor Swift’s “Eras Tour”, and Foo Fighters’ upcoming stadium tour.
Despite the rising cost of living, entertainment is a priority spending area for many consumers. One in 10 (11 per cent) is cutting back on other expenses to afford tickets to concerts and movies, while a similar proportion (10 per cent) said they treated themselves to a concert or film ticket in July even though they couldn’t really afford it.
While consumers were keen to venture out in July, “insperiences” (indoor experiences) also proved popular, likely due to the wetter weather seen in the second half of the month. Takeaways and digital content & subscriptions rose 9.2 per cent and 9.9 per cent respectively, with the growth in streaming services possibly linked to platforms cracking down on account sharing, requiring consumers to pay for separate logins.
Travel spending also continued to perform well, with travel agents and airlines both seeing noticeable uplifts (7.8 per cent and 39.1 per cent respectively), as holidaymakers made plans for the rest of the year.
Second-hand school savers
Despite positive growth in June, clothing retailers were hampered by the unseasonal weather in July, and so fell back into decline (-3.1 per cent). This comes as six in 10 (60 per cent) of those cutting back on discretionary purchases to cope with rising household bills say they are reining in new clothes and accessories purchases.
The back-to-school period is not expected to reverse this decline, with only two in five (42 per cent) parents of school age children planning to buy brand new items this year. Instead, many parents will be buying second-hand uniforms online (23 per cent), or sourcing items from families with older children who have outgrown theirs (23 per cent). Three in 10 parents are also planning to give away their children’s old uniform to families that can’t afford new items.
Esme Harwood, Director at Barclays, said: “While July’s weather was a wash-out for clothing retailers, it was a ray of sunshine for takeaways and streaming services, which performed better than expected. Entertainment also enjoyed a huge boost, largely thanks to pre-sales for Taylor Swift’s and Foo Fighters’ upcoming stadium tours.
“With value-for-money still a major concern at the supermarket, eagle-eyed consumers are also spotting signs of “drinkflation” – “shrinkflation” on alcoholic drinks. This could be due to manufacturers making changes to their products ahead of the recent changes to alcohol duty, which mean that drinks are now taxed according to strength rather than type.”
Abbas Khan, UK Economist at Barclays, said: “Over the first half of 2023, high inflation rates have weighed on real household disposable incomes and constrained consumption. On the bright side, this headwind is expected to abate over H2 as inflation in essential categories such as energy and food is set to ease.
“However, offsetting this, more households are set to experience higher mortgage costs as they refix onto higher rates. Accordingly, while we do not expect a consumer recession in the coming quarters, growth is likely to be meagre.”
Notes to editors
*CPIH: Consumer Prices Index including owner occupiers’ housing costs
**ONS annual inflation rate for food and non-alcoholic drinks rose by 17.4 per cent in the year to June 2023 – down from 18.4 per cent in May 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.
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 24th June 2023 to 17th July 2023. It is compared with 25th June 2022 to 18th July 2022.
Spend Growth | Transaction Growth | |
Essential | 1.0% | 2.7% |
Non Essential | 5.6% | 4.8% |
OVERALL | 4.0% | 3.9% |
Retail | 2.9% | 3.4% |
Clothing | -3.1% | -0.9% |
Grocery | 5.3% | 3.2% |
· Supermarkets | 5.2% | 2.3% |
· Food & Drink Specialist | 6.2% | 8.2% |
Household | -2.9% | 3.7% |
· Home Improvements & DIY | -4.4% | 0.3% |
· Electronics | -0.4% | 9.4% |
· Furniture Stores | -2.1% | 0.0% |
General Retailers | 6.0% | 7.0% |
· General Retailers & Catalogues | 6.2% | 8.1% |
· Department Stores | 9.7% | 16.0% |
· Discount Stores | -2.0% | -3.2% |
Specialist Retailers | 2.7% | -0.1% |
· Pharmacy, Health & Beauty | 4.9% | 0.6% |
· Sports & Outdoor | -1.5% | -6.5% |
· Other Specialist Retailers | 3.3% | 1.1% |
Hospitality & Leisure | 10.9% | 5.6% |
Digital Content & Subscription | 9.9% | 3.1% |
Eating & Drinking | 9.2% | 4.2% |
· Restaurants | -2.5% | -9.2% |
· Bars, Pubs & Clubs | 7.6% | 4.5% |
· Takeaways and Fast Food | 9.2% | 4.4% |
· Other Food & Drink | 13.0% | 5.2% |
Entertainment | 15.8% | 9.0% |
Hotels, Resorts & Accommodation | 5.6% | 0.4% |
Travel | 14.3% | 12.5% |
· Travel Agents | 7.8% | 11.0% |
· Airlines | 39.1% | 35.4% |
· Public Transport | 11.3% | 12.2% |
· Other Travel | 6.1% | 10.3% |
Other | -2.4% | 1.2% |
Fuel | -22.5% | -6.9% |
Motoring | 3.4% | 4.7% |
Other Services | 10.8% | 12.4% |
Insperiences | 9.0% | 3.6% |
Online | 5.9% | 5.9% |
Face-to-Face | 2.6% | 3.1% |
The consumer confidence survey in this press release was carried out between 21st and 25th July 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.
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.
Media Contact:
Oliver Palca
oliver.palca@barclaycard.co.uk
Dee Fallon
deirdre.fallon@barclays.com
SOURCE: Barclays
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