Consumer card spending at lowest point since 2022

Consumer card spending grew just 1.9 per cent year-on-year last month, significantly lower than the latest CPIH inflation rate of 4.2 per cent and the smallest growth since September 2022.

Face-to-face retail (excluding groceries) was a major contributor to this slowdown, contracting 2.2 per cent, which helped boost “Insperiences”, including takeaways and digital content, as Brits spent more time at home. Reassuringly, concerns about inflation, rising food prices and increasing household bills eased, while confidence in non-essential spending reached a two-year high.

Essential items saw less growth (2.3 per cent) than in January (4.2 per cent), with lower prices at the pump leading to a fall in fuel spending (-12.2 per cent). Meanwhile, spending on public transport increased just 3.8 per cent – the smallest rise since March 2021 – as wet and icy weather combined with industrial action caused train cancellations and delays across the country.

Food price inflation dropped to its lowest level since April 2022, at 7.0 per cent*, which contributed to supermarkets (3.9 per cent) and food and drink specialist stores (2.7 per cent) seeing lower uplifts than in January (both 5.2 per cent).

The deceleration in food inflation has helped ease concern about rising grocery prices. While still high at 84 per cent, this is the lowest figure recorded since Barclays started tracking this data point in December 2021.

Two thirds (66 per cent) of Brits are still looking for ways to get more value from, or to reduce the cost of, their weekly shop. To save money, two fifths (42 per cent) of this group have cut down on supermarket impulse buys, while a third (32 per cent) is stocking up on their favourite or essential products when they are on offer. A further quarter (25 per cent) is sticking to basic ingredients or cupboard stables – such as pasta, rice and vegetables – to prepare simple, cheaper meals at home.

Recent supply chain disruption and the continuing impact of shrinkflation are front of mind for shoppers. Over half (51 per cent) has noticed supermarket products running out of stock in the last month, while three in 10 (29 per cent) are specifically concerned about tea shortages, in light of reports of empty space on the shelves.

Concerns about the cost and size of products – owing to shrinkflation – remain high at 78 per cent. As a result, 63 per cent of Brits say that they would like to see the Government taking action to intervene – for example, by mandating manufacturers disclose changes in content, volume or weight on product labels.

As consumers continue to pay close attention to their finances, over a third (36 per cent) say they have noticed more examples of brands adding extra and hidden charges at the checkout when spending online, otherwise known as “drip pricing”.

This is most frequently spotted when paying for food delivery services (39 per cent), airline tickets (32 per cent) and live events (32 per cent). In response, seven in 10 (68 per cent) welcome the Government’s plan to ban unavoidable hidden fees, requiring businesses to disclose all costs upfront, as part of the Digital Markets, Competition and Consumers Bill (DMCC).

Close to four in 10 (37 per cent) say drip pricing is their biggest shopping frustration when paying online, followed by auto-renewed subscriptions (30 per cent), and altered or surged prices in response to demand – also known as dynamic pricing (28 per cent).

Spending on non-essential items increased just 1.7 per cent in February – the lowest growth since September 2022 – as wetter weather cast a cloud over multiple sectors and Brits spent more time indoors.

Face-to-face retail (excluding grocery shopping) and clothing stores saw declines of -2.2 per cent and -1.0 per cent respectively. Meanwhile, online retail (excluding groceries) grew slightly, up 1.2 per cent, and occupied 56.2 per cent of retail spending (excluding groceries), indicating that Brits chose to avoid the rain and shop online from the comfort of their homes.

Consumers’ confidence in their ability to spend on non-essential items reached its highest point since November 2021 last month, at 59 per cent. Meanwhile, concerns about inflation, and rising household bills also softened to 84 per cent, the most positive figures for more than two years – indicating that easing inflationary pressures are having a positive impact on household finances.

Karen Johnson, Head of Retail at Barclays, said “February’s wet weather meant Brits chose to spend more time indoors, resulting in a slowdown in high-street and hospitality spending. This shift in behaviour meant insperiences enjoyed a boost, as consumers opted to enjoy cosy nights in with a TV show and a takeaway.

“At the supermarket, the majority of shoppers have noticed the impact of supply issues on stock, with tea shortages causing the most concern. Meanwhile, ‘drip pricing’ has topped the list of shopper bugbears, particularly when using food delivery services and buying airline tickets.

“With Brits having reined in discretionary spending during the winter months, and as inflationary pressures begin to ease, retailers will be hopeful that the onset of warmer weather lifts spending – particularly if consumer confidence improves in the summer.”

Jack Meaning, Chief UK Economist at Barclays, said “We have continued to see encouraging signs of slowing price growth so far in 2024, particularly in the retail sector. Recent data shows shop price and grocery inflation decelerated significantly in February, as retailers offered shoppers discounts and promotional offers. This will be a welcome reprieve for consumers, and a probable explanation of last month’s subdued card spending growth: while many people will have taken advantage of recent price promotions, they look to have held back on spending at least some of what they saved elsewhere.”

Overall growth figures:

Overall Growth Figures

Source:  Credit Connect

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