Overall Consumer Card Spending Slows In May But “Modest Increase” In Hospitality Spend

Consumer card spending grew just 1.0 per cent year-on-year in May, down from April’s 4.5 per cent growth, and below the latest CPIH inflation rate of 3.5 per cent. May’s two Bank Holidays encouraged discretionary spending, yet this was offset by wet weather in the second half of the month, and by consumers cutting back amid falling confidence in personal finances.

UK consumers’ confidence in both household finances and ability to spend on non-essential items declined in May – household finances fell three percentage points to 67 per cent, while ability to spend on non-essentials fell four percentage points to 56 per cent.

Pointing to a potential explanation, Barclays’ research also reveals rising concerns in several areas including ‘shrinkflation’ (up four percentage points to 82 per cent), ‘streamflation’ – the rising cost of digital content and subscriptions – (up four percentage points to 64 per cent), and interest rates (up three percentage points to 64 per cent).

As a result, nearly half (46 per cent) of UK adults say they plan to reduce their discretionary spending – a slight increase compared to April (45 per cent) – corresponding to non-essential spending growing by just 2.0 per cent in May, well below the 5.1 per cent growth recorded the previous month.

Despite exercising financial caution, two in five (40 per cent) UK adults say they still enjoy treating themselves regularly but are finding budget-friendly options. Popular choices include waiting for sales (41 per cent), opting for smaller, affordable treats (36 per cent), and setting aside savings specifically for occasional indulgences (24 per cent).

Meanwhile, airline spending soared by 9.7 per cent – a notable jump from April’s 5.5 per cent – as jetsetters locked in their summer plans. A quarter (25 per cent) of UK adults say they’ll opt for lesser-known or cheaper alternatives to popular tourist spots this year, otherwise known as “Destination Dupes”. Of these, a third (33 per cent) cite cost savings as the main reason, while others are seeking more authentic (29 per cent) or more up-and-coming (18 per cent) destinations.

Despite the dual Bank Holidays in May, which typically fuel hospitality and leisure spending, the sector only rose by a modest 3.3 per cent.
Pubs, bars and clubs were up just 2.5 per cent, likely due to the latter half of the month bringing rainy showers and dampening pub gardens across the nation.

Consumers may also pushed the boat out during the two Bank Holidays in April, when spending on pubs, bars and clubs rose 6.6 per cent, and so opted to have quieter Bank Holidays in May to rebalance their budgets.

Karen Johnson, Head of Retail at Barclays, said: “Consumers are clearly becoming more value-conscious as financial pressures persist, but they’re still finding joy in the everyday – whether that’s a small treat, a cinema trip, a garden project, or a carefully planned getaway. The double Bank Holidays in May and record sunshine will have given non-essential spending a helpful boost, but this was largely outweighed by the rainy weather in the second half of the month, while longer-term uncertainty continues to shape how and where people choose to spend.”