September’s sun “boosted” high street spending

Consumer card spending grew 4.2 percent year-on-year in September as the late summer sun boosted in-store spending across the UK, according to the latest Barclays report.

September’s growth was less than the latest CPIH inflation rate of 6.3 percent, but higher than August’s growth figure of 2.8 percent, with spending on non-essential items increasing by 4.0 percent, slightly more than in August at 3.7 percent.

The report also revealed that clothing stores saw a slight improvement (-0.2 percent) compared to August (-0.7 percent) as shoppers browsed for seasonal fashion items, while pharmacy, health and beauty stores enjoyed their highest uplift, up 6.9 percent since January 2023, due to the “lipstick effect,” where consumers prioritise small indulgences over big-ticket items during periods of economic uncertainty.

Bars, pubs and clubs also had a positive month, rising 6.1 percent compared to 2.8 percent last month, likely due to sports fans flocking to watch major sports events such as the Rugby World Cup.

Meanwhile, travel, which has been one of the best-performing categories in 2023, continued its double-digit growth (13.2 percent). Much of this uplift was driven by demand for holidays abroad, with spending on airlines up 31.1 percent.

Brits expect Christmas to be more expensive than last year

Barclays also notes that Brits are reining in discretionary spending as they save money for the festive period as the rising cost-of-living crisis continues to impact finances. One of the reasons for Autumn savings it adds is that two in five (40 percent) Brits state they expect this coming Christmas/festive period to be more expensive than last year. To help spread the cost, a fifth (20 percent) has started to buy presents already, while 18 percent have spoken to loved ones to make a mutual agreement to cut back on gift-giving.

Jack Meaning, chief UK economist at Barclays, said in a statement: “Over the last few months, a picture has been building of consumers beginning to pull back on discretionary spending as the cost of living and monetary tightening from the Bank of England increasingly bite. We’ve seen the warning signs from surveys, and now we see it in the more concrete spending data.

“This suggests the outlook for consumers, and the businesses that rely on them, is weak, even as they finally see their disposable incomes rise faster than inflation. It makes it hard to see anything but a relatively stagnant economy on the horizon.”