Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essentials (3.8 per cent) outstripped discretionary spend growth (2.8 per cent) last month – the return of a trend seen over the second quarter of 2017. Expenditure on ‘must-haves’ was driven by increased spending at the pump (5.4 per cent) and in the supermarket (3.7 per cent), as higher prices on petrol and everyday groceries helped push inflation to its joint-highest rate in more than five years (2.9 per cent).
Shoppers reined in their spending on entertainment (8.2 per cent), reflected in slower growth in restaurants (11.4 per cent) and pubs (7.7 per cent) – down from 12.4 per cent and 9.2 per cent respectively in August. Last month’s figure was the smallest increase in pub expenditure since March 2015, suggesting the arrival of unpredictable, autumnal weather may have kept Brits away from beer gardens. The absence of any major ticket releases or blockbusters in September saw spending on cinemas and event tickets fall 5 per cent to enter negative territory for only the second time this year.
Balancing the books remains a top priority for Brits as they continue to make minor adjustments in spending to offset rising prices and stagnating wage growth. Six in 10 (62 per cent) now feel they get less for their money compared with three months ago – the highest figure since Barclaycard first started asking this question in 2014.
Months of ‘feeling the squeeze’ appear to be taking their toll, with consumers growing increasingly concerned about future economic shocks. More than four in 10 (42 per cent) believe they would have to make spending cutbacks if interest rates rise in the future, while a similar proportion (40 per cent) are putting major household purchases – such as a new car – on hold amidst economic and political uncertainty.
This cautious outlook appears to have dampened any sense of early festive cheer with many consumers planning a more modest Christmas this year, four in 10 (41 per cent) saying they intend to spend less than they did in 2016.
Value-seeking consumers will instead be looking to the November sales period to maximise their budget, with 58 per cent planning to buy goods on Black Friday and Cyber Monday and one in five (22 per cent) putting money aside in the coming months in order to do so.
Clothing and electronics retailers look set to benefit most; four in ten of those who plan to take advantage of the sales (45 per cent) intend to purchase items for their wardrobe, while a third (35 per cent) plan to buy a smartphone or tablet.
Paul Lockstone, Managing Director at Barclaycard, said:
“Household expenditure was largely flat in September after accounting for the effect of inflation. Rising prices are undoubtedly having an impact on shoppers’ spending priorities, with more of the budget devoted to everyday essentials. As a result, consumers are having to work increasingly hard to stretch their monthly budget and the ‘nice to haves’, such as time at the pub and eating out, have clearly taken a knock.
“Looking ahead, consumers are protecting their purse strings against potential rate rises and other economic and political uncertainties. Many are planning a more frugal Christmas and will be taking advantage of peak sales periods such as Black Friday and Cyber Monday to make their money go further. As we head towards the festive season it will be interesting to see whether their spending intentions translate into reality.”