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Card Spending Slows To Three-Year Low But Pubs & Bars Still Showing Growth

Consumer card spending grew just 1.0 per cent year-on-year in May, the smallest rise since February 2021 and significantly lower than the latest CPIH inflation rate of 3.0 per cent, however spending in pubs and bars and clubs grew from 1.4% to 2.9%.

Resilient categories such as airlines and takeaways were knocked by rising household bills, while wet weather continued to cast a cloud over the high street. However, consumers are feeling optimistic about the latest inflation figures, with three in 10 (28 per cent) planning to spend more when the weather improves.

Brits reined in spending on takeaways and fast food in May, with the category recording its first decline (-0.2 per cent) since May 2020. This comes as 44 per cent say they are reducing their discretionary spending, citing ordering takeaways (54 per cent) as their number one cutback.

Over half (53 per cent) of these consumers are also cutting back on eating out at restaurants, with spending in this category seeing an even greater decline in May (-15.7 per cent) than in April (-13.1 per cent).

Travel, another of the UK’s typically more resilient sectors, also had a challenging month. Airlines saw their smallest uplift (5.6 per cent) since July 2021, while spend growth at travel agents was as its lowest level (4.3 per cent) since August 2023.

On a more positive note, almost three in 10 (28 per cent) Brits say they will spend more when the weather improves this summer – a figure which rises to 39 per cent for 18- to 34-year-olds. Two fifths (39 per cent) of this group plan to spend more on food and drink for picnics, a third (34 per cent) say they’ll fork out on drinking and dining al fresco at pubs and restaurants, and 29 per cent intend to buy barbeque supplies to host friends and family in the coming months.

In addition, news that UK inflation has fallen to its lowest level in almost three years has eased consumer concerns. Despite some household bills rising in recent months, six in 10 Brits (62 per cent) say the inflation announcement has made them confident in their ability to live within their means each month, and a similar proportion (56 per cent) say it has made them confident in their household finances.

Karen Johnson, Head of Retail at Barclays, said:
“Retailers faced a challenging May, yet the few sunnier days in the month did bring a welcome uptick in footfall. As consumers gear up to spend more with better weather, and with the Euros, Wimbledon, and Taylor Swift’s ‘Eras Tour’ on the horizon, there’s a brighter outlook for the coming months.”

Jack Meaning, Chief UK Economist at Barclays, said:
”The economic strength we saw in the first three months of the year was always expected to ease as we moved into the second quarter, with GDP having seen the extra bounce needed to recover the ground lost in last year’s recession. The underlying direction of travel remains though, with falling inflation, real income growth and low unemployment all pointing to a gradual acceleration in consumer spending over the next 12 months, especially as we begin to see the Bank of England reduce interest rates in H2.”