August Card Spending Grows By Just 0.5% But Base Hospitality Sees A 2.5% Increase

Consumer card spending grew just 0.5 per cent year-on-year in August, down from 1.4 per cent in July and lower than the latest CPIH inflation rate of 4.2 per cent. Essential spend declined, however discretionary spend rose 2.0 per cent.

The overall hospitality and leisure category grew 2.5 per cent in August. The strongest performing subcategory was digital content & subscriptions, which climbed by 5.6 per cent, amid the success of animated film KPop Demon Hunters. Other streaming hits in the month included The Summer I Turned Pretty and Wednesday. Entertainment spending also rose, up 5.3 per cent year-on-year.

Confidence in the strength of the UK economy improved six percentage points month-on-month in August, rising to 28 per cent, while confidence in the European and global economy both hit 10-month highs, at 31 per cent and 28 per cent respectively. Confidence in household finances (73 per cent), was up both month-on-month, and year-on-year, from 72 per cent and 70 per cent respectively. One in five (18 per cent) said the base rate reduction eased their personal finance concerns, while fewer consumers said they were concerned about rising interest rates in August, down one percentage point to 62 per cent.

Travel, which has emerged as one of the strongest performing non-essential categories post-COVID,  grew 3.1 per cent in August. However, over half (54 per cent) of consumers say they are opting for an off-peak holiday in 2025, rising to 71 per cent among Gen Z. Of those travelling off-peak, two in five (38 per cent) actually prefer the so called “shoulder season”, while one in three (32 per cent) are booking trips during quieter times to save money.

Consumers are also making use of AI tools to help cut costs. Of the one in three (34 per cent) using AI tools such as Chat GPT for planning, spending and budgeting, 27 per cent are doing so to plan holidays. Among this group, the top uses are creating itineraries (35 per cent), researching and choosing destinations (32 per cent) and translation (30 per cent), while 27 per cent are finding and comparing prices, discounts and deals with these tools.

Karen Johnson, Head of Retail at Barclays, said:
“Encouragingly, confidence in household finances remained steady in August, suggesting that while the cost of living is still front of mind, consumers are learning to navigate the challenges and make the most of their budgets.

“It’s clear that the ‘lipstick effect’ is having an impact outside of beauty, with shoppers treating themselves to feel-good purchases for themselves and their homes. Similarly entertainment and travel continue to benefit from consumers’ appetite for fun and memorable experiences, with KPop Demon Hunters emerging as a big winner this summer.”

Jack Meaning, Chief UK Economist at Barclays, said:
“It is great to see consumer confidence improve in August, and households feel the benefit of another Bank of England rate cut. However, the outlook for the rest of the year remains subdued, particularly as Budget speculation is likely to add to uncertainty for both households and businesses. In our view, it will take further interest rate cuts to provide the economy with a sustained boost.”