Card spending grew 2.0 per cent in September, according to Barclays’ latest Consumer Spend report. This was slightly lower than August’s 2.1% growth, and below the latest CPIH inflation rate of 3.3%.
The increased spending was driven in part by consumers spending more on fuel as diesel prices soared. A 17.3% uplift in fuel spending drove a 2.5% increase in essential spend.
Overall, essential spending increased 2.5%, outpacing the 1.8% increase in non-essential spending. With warm weather continuing throughout September, continued demand for meals and drinks out supported hospitality & leisure’s 2.7% boost.
Within retail, clothing spend growth fell 1.3% although transaction growth increased by 3.8%. Supermarkets also experienced a retraction in spend growth of 0.8%, although food & drink specialists enjoyed growth of 6.3%. Elsewhere, household and DIY enjoyed spend growth of 1.2%, general retail grew by 3.6%, and specialist retailers (including beauty, pharmacy and sports) grew by 2.6%.
Consumer confidence increases
Confidence in household finances was at 67%, the highest so far this year, while confidence in job security remained relatively low at 45% and consumers’ ability to live within their means climbed 2% month-on-month to 73%. Confidence in the UK economy is at 26%, a 4% drop from the year’s most confident month, June (30%). However, figures have remained fairly consistent for the year so far, with only small increases or decreases month-on-month.
The Autumn Budget is impacting consumer confidence, with nearly seven in 10 consumers (68%) reporting concern about the potential impact on their household finances, while 61% are concerned about possible tax changes. As a result, 30% say they’re reducing non-essential spending, and 27% are delaying both major purchases and important financial decisions.
Rohan Kumar, head of spend insights at Barclays, said: “Spending maintained momentum in September, with growth across both essential and non-essential categories as confidence in household finances reached a seven-month high.
He added: “Warmer weather supported another strong month for hospitality and leisure, while the rise in digital subscriptions suggests consumers are balancing socialising with autumn nights at home, even as pre-Budget uncertainty keeps value and careful decision-making front of mind.”
Growth remains patchy
September’s spending growth looks healthier on the surface than underneath. Warmer weather helped keep consumers spending on meals, drinks and leisure, while food and drink specialists also enjoyed a strong month. But a sizeable chunk of the growth came from higher fuel costs, boosting essential spend without leaving consumers any better off.
With confidence in household finances improving but concerns over the Autumn Budget prompting many shoppers to delay major purchases and cut back on discretionary spending, retailers are heading into the final quarter facing a consumer who remains willing to spend, but increasingly selective about where and why.
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