Consumer card spending grew just 0.5 per cent year-on-year in March – lower than February’s 1.0 per cent growth and less than the latest CPIH inflation rate of 3.7 per cent.
However, spending on hospitality & leisure increased 2.8 per cent in March, suggesting consumers prioritised experiences and making memories over material goods.
The sunny weather boosted non-essential categories however, in anticipation of rising bills and inflation on imported products, consumers are feeling less confident in their household finances and continue to find ways to cut back on essential costs.
UK consumers’ confidence in both household finances and ability to live within their means fell back in line with January’s figures following a spike in February, to 70 per cent (down from 75 per cent) and 74 per cent (down from 77 per cent) respectively.
Nearly two fifths (37 per cent) of UK adults said they were trying to reduce their outgoings in March in anticipation of rising household bills, contributing to a -2.9 per cent decline in essential spending (in comparison to -1.0 per cent in February).
Prioritisation of discretionary purchases remains strong, as 61 per cent report budgeting for these expenses, with the non-essential spending category up 2.2 per cent year-on-year.
In light of recent events, two thirds (67 per cent) of consumers are concerned that the products they buy from outside the UK will become more expensive. Meanwhile, three quarters (71 per cent) say they want to support UK businesses by buying more products that are “Made in Britain”. Two in five (40 per cent) say they are looking for UK-made alternatives to products they currently buy that are produced abroad.
Research conducted between 8th-11th April found that confidence in the UK economy dipped slightly month-on-month in March to 24 per cent (down from 25 per cent). In comparison, a smaller proportion reported feeling confident in the strength of the global and US economy, both at 20 per cent.
Food and drink specialist stores potentially benefitted from a dip in grocery spending, enjoying their highest growth since October 2023, up 4.3 per cent, perhaps also due to the increasing popularity of artisan and locally made produce.
Travel spend was up 5.7 per cent year-on-year (up from 5.1 per cent in February), and both travel agents (7.1 per cent) and airlines (7.4 per cent) saw strong growth. Three fifths (61 per cent) of consumers say they have spent on non-essential items even when were financially stretched, with holidays emerging as the top priority purchase. One in five (21 per cent) admit to spending money on trips they had not budgeted for, with other unbudgeted fun including days out (20 per cent) and expensive meals (17 per cent).
Screentime holds steady despite subscription concerns
Spending on digital content and subscriptions (up 5.7 per cent) continued to benefit from popular TV shows such as Adolescence and The White Lotus. However, as prices rise, three in 10 (31 per cent) believe they’re now getting less value for money from their digital content and subscriptions.
As a result, a third (32 per cent) of this group have cancelled a subscription, and 16 per cent have paused or suspended their payments. One in seven (14 per cent) limit themselves to a set number of services to keep costs under control, and a similar proportion (12 per cent) rotate services so they’re only paying when there is content they want to watch.
Karen Johnson, Head of Retail at Barclays, said: “Consumers are feeling the pressure of rising bills, alongside being mindful of the impact recent global events may have on their finances. In a bid to keep costs down, households are adopting more prudent budgeting , which has led to a resurgence of the ‘big weekly shop’.
“There are some welcome green shoots however, as the warmer weather and longer evenings encouraged consumers to invest time and money in gardening and DIY- a trend that looks set to continue in the run up to Easter.”
Jack Meaning, Chief UK Economist at Barclays, said: “Following stronger than expected GDP growth in February, today’s data highlights the risks to consumer spending in the months ahead. The impacts of heightened uncertainty and rising bills are already being felt. We expect spending to remain muted through mid-2025, before picking up into 2026 as interest rates easing starts to be felt and uncertainty begins to normalise.”