The report from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, showed consumer card spending rose 7.4% in January compared to the same period in 2020- the smallest uplift since April 2021- as sectors were hampered by Plan B restrictions, rising energy costs and inflation.
While hospitality and leisure spending declined overall, it remained stable among both 16 to 24 and 25 to 34 year olds (up 0.9% and 0.5% respectively), possibly due to younger consumers feeling less concerned about catching Covid.
A quarter (25%) of UK adults said they were spending more on items and experiences to lift their spirits during the winter months, with 39% of Brits planning to eat and drink out more often. 31% felt confident that the vaccine booster rollout would lead them to increase spending on socialising.
Also, expected boosts from Valentine’s Day, return-to-office, and growing international tourism may offset economic headwinds over the coming months. Almost three in ten planned to celebrate the occasion, with this year’s budget set to rise from an average of £63 during 2021 lockdown, to £77 this year.
Brighter times ahead
Meanwhile, the colder weather and Plan B guidance caused a strong growth in ‘insperiences’ (up to 50%), as consumers enjoyed nights in with a takeaway.
Barclaycard head of consumers products Jose Carvalho said: “January’s Covid restrictions, combined with the rise in the cost of living, clearly impacted consumer spending levels in January. While restaurants and bars, pubs and clubs were inevitably hampered by the ongoing pandemic, there are signs of brighter times ahead for hospitality as Brits say they’re planning to spend more on eating and drinking out to lift their spirits during the winter months.
“The lifting of Plan B restrictions should also provide a welcome boost to many sectors, as workers travel back into the office and socialise over post-work drinks, while businesses will likely start to see the benefits of increased inbound tourism on retail sales too”.
Spending shifts
Spending on essential items grew 10.4%, the smallest rate in nine month, which can largely be attributed to fuel spend seeing its slowest rate of growth (6.7%) since October 2021, as Plan B Covid restriction meant Brits travelled less throughout January.
Despite rising inflation, supermarket spending saw its smallest rise (13.6%) since before the pandemic’s onset, as consumers shifted spending to food and drink specialist retailers (up to 67.3%) such as bakeries, butchers and recipe box services. Brits chose to shop locally due to the work-from-home guidance and re-started meal kit subscriptions over the Christmas break.
Spending on non-essential items saw markedly smaller growth in January (6.1%) than in December (11.5%), likely due to Plan B guidance and the continued rise in living costs.
This comes as nearly nine in ten Brits expressed concerns about the impact of rising inflation on their household finances, while three in ten said they expected increasing household bills to affect the amount they spent on discretionary purchases.
