The trends insight from Barclays showed while non-essential spending hit an 18-month low, sporting events benefitted the on-trade.
Overall consumer card spending growth flatlined in March – the same as February’s 1.9% rise and significantly less than the latest Consumers Price Index (CPIH) inflation rate of 3.8%.
The flatline was largely due to the slowdown in non-essential spending, which experienced its smallest rise (1.6%) since September 2022 with wet weather dampening retail and restaurant sales.
Spending confidence
Barclays head of retail Karen Johnson said: “Retailers were braced for a more subdued start to 2024 and recent figures are in line with expectations.
“The wet weather has been a key factor in the slowdown in discretionary spending as it has meant fewer visits to the high street and to hospitality venues.
“However, in spite of this initial lull, many retailers are confident spending will rebound in the coming months, particularly in anticipation of better weather, the energy price cap drop, an uplift in the national minimum wage and the buzz around major events such as Taylor Swift’s Eras Tour and the Paris 2024 Olympics.”
The figures came as 45% of customers said they were continuing to rein in discretionary spending with more than half (53%) of this group cutting back on clothing and accessory purchases with 47% spending less on dining out.
Barclays UK head of savings and mortgages Mark Arnold added: “Non-essential spending is still reeling from last year’s spike in housing costs, which caused both homeowners and renters to cut back while looking for additional sources of income such as delaying renovations and renting out spare rooms.”
Furthermore, the research revealed there were glimmers of positivity with growing stability in UK housing costs.
Reasons to be optimistic
“However, there are reasons to be optimistic – our data shows housing costs are stabilising, the inflationary tide is easing and interest rates are predicted to fall over the coming months, all of which should translate into increased consumer confidence and spending,” he added.
This optimism was echoed by Barclays chief UK economist Jack Meaning who outlined the impact of a potential easing in the economic headwinds.
Meaning said: “While still only tentative, the signs the UK economy is expanding into 2024 continue to build.
“With an expectation the Bank of England will cut interest rates from June and banks responding by reducing mortgage rates, our research suggested the housing costs that have been a drag on consumers for more than a year are on the cusp of a turn and will become a boost to spending from the second half of the year and beyond.
“Today’s data shows this transition happening in real time.”
Data from card payment processing firm SumUp reiterated Barclay’s findings and reported pubs, bars and clubs saw a 52% rise in takings from 29 March to 1 April 2024 against 22 March to 25 March 2024 (the previous Friday to Monday).
This followed positive trading reports from businesses across the recent Easter bank holiday period.
A number of operators told The Morning Advertiser the long weekend was strong while the British Beer & Pub Association worked out an additional 11m pints were served between Thursday 28 March and Monday 1 April.
