March was an especially strong month for non-essentials, which rebounded to 4.8 per cent from 3.5 per cent in February. Consumers splashed out on entertainment (11.6 per cent) as they welcomed the UK’s fifth-warmest March on record with visits to pubs (12.5 per cent) and restaurants (12.2 per cent). Hotels also recorded a double digit growth of 12.3% which is largely attributed to the depreciation of the pound compared to 2016.
Spending on ‘nice-to-haves’, however, remained resilient in some areas. Entertainment was particularly healthy, increasing 10.4 per cent in Q1 and marking its eleventh consecutive quarter of double-digit growth.
Nonetheless, the propensity to continue spending on social occasions and travel plans shows that consumers have been, on the whole, balancing their monthly budget. This is supported by a healthy majority (70 per cent) expressing confidence in their household finances, with almost six in ten (57 per cent) also feeling confident in their ability to spend more on non-essential items.
This buoyant approach to spending coincides with a rise in the proportion of consumers expressing confidence in the UK economy, which – after a steady climb starting from October 2016 – now stands at 41 per cent. The figure represents the second-highest level recorded in the last 12 months and a seven per cent increase on the same month last year.
Consumers are, however, feeling less upbeat about the near future, with the inflationary pressures of recent months giving them cause for concern. Over half (52 per cent) of Brits are more worried about the cost of day-to-day items than they were this time last year, with nearly three quarters (74 per cent) citing a more expensive weekly shop as the reason.
Paul Lockstone, Managing Director at Barclaycard
“It was another strong month and quarter for consumer spending, but the headline figure again masks a story of consumers making small, yet necessary, adjustments to their spending to accommodate the rising cost of day-to-day items.”
“Robust growth in spending on ‘nice-to-haves’ suggests consumers are still willing to treat themselves, especially on experiences with friends and family.”
“Although the triggering of Article 50 is a major step along the road to Brexit, the lack of reliable news on the outcome of the negotiations might mean that companies, households and markets simply ignore the noise and wait for firm announcements to be made.”