Consumer card spending growth has hit a three-year low in May, with rising household bills and poor weather leading to cautious budgeting, according to recent figures.
Card spending saw a mere one percent increase year on year in May, marking the smallest rise since February 2021, as even resilient sectors such as airlines and takeaways felt the impact of escalating household bills, as per the Barclays Consumer Spend report.
April’s price hikes on bills including council tax and broadband have dented consumer confidence, with a staggering 87 percent expressing concern about the effect of rising household costs on their personal finances, a survey for the report discovered.
A significant 80 percent voiced worries about increasing council tax, followed by concerns over broadband and mobile costs (79 percent), water bills (76 percent), and dental costs (75 percent).
The report by Barclays revealed that spending on non-essential items recorded its smallest increase since February 2021 at just 0.7 percent, although spending on utilities dropped by 12.5% following Ofgem’s price cap decrease from April 1.
Brits curtailed spending on takeaways and fast food in May, with the category recording its first decline, of 0.2 percent, since May 2020.
This comes as 44 percent admitted they were cutting back on discretionary spending, with takeaways being the most common area of reduction (54 percent) followed by dining out in restaurants (53 percent).
Airlines experienced their smallest increase in spending since July 2021 at 5.6 percent, while travel agents also endured their lowest increase since August 2023 at 4.3 percent.
In a more upbeat turn, 28 percent of Britons are gearing up to loosen their purse strings with the arrival of sunnier days this summer, and this figure jumps to 39 percent among the 18 to 34-year-olds demographic.
Barclays’ retail chief Karen Johnson commented: “Retailers faced a challenging May, yet the few sunnier days in the month did bring a welcome uptick in footfall.”
She added optimistically, “As consumers gear up to spend more with better weather, and with the Euros, Wimbledon and Taylor Swift’s Eras Tour on the horizon, there’s a brighter outlook for the coming months.”
Meanwhile, Jack Meaning, Barclays’ lead economist for the UK, remarked: “The economic strength we saw in the first three months of the year was always expected to ease as we moved into the second quarter, with GDP having seen the extra bounce needed to recover the ground lost in last year’s recession.”
He further explained, “The underlying direction of travel remains though, with falling inflation, real income growth and low unemployment all pointing to a gradual acceleration in consumer spending over the next 12 months, especially as we begin to see the Bank of England reduce interest rates in H2.”
