Consumer Spending Grew Just 5.9% in February, but Pubs Record Small Increase

Consumer card spending grew just 5 9 per cent year-on-year in Februar y, below the latest CPIH inflation rate of 8 8 per cent, owing to a reduction in discretionar y purchases amidst the ongoing the cost-ofliving 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 Barclaysreveals that spending on groceries increased just 6 6 per cent in Februar y – 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

Pent-up demand for eating and drinking out in Februar y last year, combined with the impact of ongoing inflationar y 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 Januar y (18 1 per cent) – although it’s wor th noting that Januar y ’ s figures were also inflated by the Plan B restrictions last year

Brits are also switching up where they shop in order to save money

Of those tr ying 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 shor tages are also influencing grocer y 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 shor tages while a similar propor tion (33 per cent) has seen supermarkets restrict the amount of cer tain 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 shor tages of recently

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 tr ying to save energ y at home

In response to rising household bills, nearly six in 10 (58 per cent) are cutting down on discretionar y purchases, with spending on non-essential items seeing a markedly smaller year-on-year uplift (5 5 per cent) than in Januar y (10 4 per cent) The slower growth is also because last month s figures were inflated by Brits having had fewer oppor tunities for non-essential spending in Januar y 2022, during the Plan B restrictions

Card spend on clothing (-1 2 per cent) was also impacted by last year ’ s Omicron guidelines – the categor y saw a considerable uplift in Februar y 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 discretionar y purchases are reining in spending on new clothing and accessories

However, as consumers continue to seek out bargains, discount stores were a bright spot, rising slightly faster than in Januar y (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 categor y since November 2022

SUPER DUPE’R SAVINGS

In an effor t 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 quar ter (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 par tly 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 shor tages 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 flir ted with a recession in the second half of last year as real GDP declined in Q3 and was vir tually 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 sur vey indicators for consumer confidence , and the recent business activity in the manufacturing and ser vices 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