Research from Barclaycard found that consumer spending growth overall in February was up 3.8% year on year and in line with the three-month rolling average of 3.9%, as consumers made small adjustments to their budgets to make room for the ‘nice-to-haves’.
Supermarket spending saw growth of 3.2%, returning to levels seen over the past six months after a spike of 4.4% in January.
This kept expenditure growth on essentials, of which supermarket spend is a major factor, to 3.4%. As consumers continued to prioritise the ‘experience economy’, spending on non-essentials reached 3.8%.
Entertainment was a driving force, offering growth of 8.6%, which was bolstered by cinema and theatre spending, rebounding from five months of contraction to rise 7.4% year on year, as Black Panther and the second release of tickets for the musical Hamilton boosted purchases at the box office.
Continued growth
Travel spending jumped 7.4% year on year – the highest level seen since December 2016, according to Barclaycard.
This growth looks set to continue as one in four consumers (25%) said they planned to spend more on holidays in the month to come.
However, despite the propensity to spend on entertainment and travel, the mood among UK consumers remained subdued, with political uncertainty weighing heavily on their minds.
With this month (March) marking exactly one year before the UK is set to split with the EU, Brexit continued to be a cause for concern, with half of consumers (50%) worrying that the outcome of negotiations will leave them worse off than they are now – a rise of 4% compared to the previous month.
Generally, consumers remained downhearted about their current spending power, with just half (54%) feeling confident in their household finances.
Feeling the pinch
Rising prices are still causing many to feel the pinch with four in 10 (39%) of Brits reported they have less money to spend now than they did this time last year.
Of these, two thirds (67%) said it was because their weekly shop seemed more expensive than it used to be.
Consumers are cautious about spending but they balance it between essentials and luxuries, according to Barclaycard managing director Paul Lockstone.
He said: “This is the third consecutive month we have seen household spending growth above the prevailing rate of inflation suggesting that, while consumers remain cautious about their household finance, they continue to strike a balance between spending on essentials and on luxuries, whether that is a holiday abroad or tickets for the latest blockbuster.
“With a year to go before Brexit, consumers are cautious about the potential ramifications of whatever settlement the UK achieves, and half of us fear the outcome will leave us worse off than we are now. As negotiations continue it is likely this will continue to weigh on sentiment.”