Consumer card spending returned to growth in August, rising 1.0 per cent year-on-year following two consecutive months of decline, although it remained below the latest CPIH inflation rate of 3.1 per cent.
The travel sector (up 6.8 per cent) had a particularly strong month, following news that several low-cost airlines have been offering last-minute holiday deals in order to tempt Brits abroad. Travel agents (up 7.2 per cent) and airlines (up 8.3 per cent) both had strong months, seeing their highest growth since February and March respectively.
Double-dip shrinkflation
Concerns related to shrinkflation – i.e. products getting smaller but costing the same – remained stable in August, with eight in 10 reporting that this trend is having a negative impact on their household finances.
A quarter (26 per cent) have also started to spot ‘double-dip shrinkflation’, where products go through two or more rounds of size reductions, without a corresponding reduction in price. The top five most frequently cited products hit by ‘double-dip shrinkflation’, according to this group, are chocolate (57 per cent), crisps (44 per cent), packs of biscuits (41 per cent), snack bars (36 per cent) and sweets (36 per cent).
However, the sunshine has not had as much of an impact on clothing retailers, which saw only a mild improvement, declining by a marginal -1.7 per cent compared to -2.3 per cent in July.
Looking ahead to the upcoming festive season, over a third of Brits (35 per cent) anticipate that this Christmas will be more expensive than last year, and one in five (19 per cent) are worried about how they’ll keep up with those rising costs. Meanwhile, a quarter (24 per cent) are concerned that shrinkflation will mean they get less value for money on their festive spending.
That said, the summer spirit has arrived for the vast majority – Brits are feeling noticeably more confident in both their household finances (70 per cent) and ability to live within their means (73 per cent), compared to last month (65 per cent and 70 per cent respectively).
Karen Johnson, Head of Retail at Barclays, said:
“The long-awaited British summer has unlocked pent-up demand across a number of retail categories, such as garden centres and butchers, as many Brits dusted off their barbecue for the first time this year.
“We’re also seeing an emerging trend of consumers indulging in retail therapy for mood-boosting pick-me-ups. This is a much more immediate version of the long-running trend of consumers making room in their budgets for memorable experiences, like tickets for next year’s Oasis tour, which went on sale over the weekend.
“While cost-conscious shoppers continue to rein in discretionary spending to account for rising prices, especially in the run-up to Christmas, it’s encouraging to see that Brits are feeling noticeably more confident in their personal finances – a strong indicator of future spending as we approach the crucial festive period.”
Jack Meaning, Chief UK Economist at Barclays, said:
“Having seen government spending drive the economy in the second quarter, and private consumption relatively muted, this data very much supports our view that the balance will shift over the second half of the year and into next. Growing real incomes and strengthening consumer confidence should combine with falling interest rates to increasingly allow consumers to put their spending power to work.”
