Consumer card spending slowed to 1.6% growth in April, down from 1.9% in both March and February, and below the latest CPIH inflation rate of 3.8%, according to the latest Barclays data.
While consumer confidence in household finances rose to its highest level in over three years, a slowdown in food price inflation and cutbacks on food and drink led to the smallest uplift in supermarket spending since June 2022. Meanwhile, cold and wet weather dampened retail sales, but Easter and summer holiday bookings boosted pubs, entertainment and international travel.
Barclays said this comes as nearly half (49%) of UK shoppers are concerned about how much they spend on food and drink, with the same proportion making the effort to cut back on discretionary spending. The data highlighted that one in four are cutting back on coffee or drink subscriptions.
Supermarket savings surge
Despite falling food price inflation (down from 5.0% to 4.0%), a record 73% of consumers are actively looking for ways to reduce the cost of their weekly shop – the highest percentage since Barclays started tracking in January 2023.
More broadly, spending on essential items grew just 1.7% year-on-year in April, the lowest rise so far this year.
Wet and windy April puts pressure on retailers
Overall retail spending contracted by -0.1%, marking the first month of decline for the category since September 2022, as in-store shopping was hampered by April’s cold snap. Face-to-face retail (excluding groceries) fell by -2.5%, and clothing sales dropped by -2.1%.
However, pharmacy, health & beauty retailers bucked this trend, seeing a 4.9% increase, boosted by a number of macro factors, such as the “lipstick effect”, the wellness boom and viral makeup and skincare videos.
DIY down as consumers cut costs
Furthermore, UK shoppers are trying to cut down on their household costs, with 40% saying they will not spend on their home or garden ahead of the summer. Many are opting to postpone renovations or home improvements, as consumer card spending on household categories such as homewares, electronics and DIY fell by -4.1% in April.
“Given the long squeeze consumers have faced, it may take time for this to translate into stronger discretionary expenditure, but easing interest rates in the second half of this year should spur consumers’ confidence and spending,” noted Jack Meaning, chief UK economist at Barclays.
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