Consumer spending grew by 1.7 per cent year-on-year in July – representing a decline in real terms when accounting for inflation – following similarly muted figures in May and June, according to Barclaycard.
Data from the global payment business, which claims to process nearly half of the nation’s credit and debit card transactions, shows that ‘essential spending’ contracted by 0.9% as supermarkets and petrol both saw a decline of 0.7% and 2.4% respectively from June 23 to July 20 against with the year-ago period.
‘Non-essential spending’, however, remained in positive territory at 2.4% growth, bolstered by consumers continuing to spend on entertainment and experiences. Following the release of Disney blockbusters such as ‘The Lion King’ and ‘Toy Story 4’, cinemas ticket sales showed strong growth of 14.8%.
Meanwhile, restaurants enjoyed a 10.1% uplift as Brits took advantage of the long summer evenings by relaxing and dining out. Barclaycard said pubs saw growth of 5.6% but described this as ‘a fairly modest rise compared with July 2018, when the heatwave and World Cup fever led to a boom in pub spending (up 16.8% year-on year)’.
Travel grew by 2.6% as airline expenditure bounced back from three consecutive months of decline to grow by 3.7%, with many consumers taking advantage of discounting and Sales to enjoy a last-minute summer break.
Retail, on the other hand, continued to struggle, with department stores contracting by 3.9%.
July’s overall figure follows similarly muted results from May and June, with consumer spending showing growth of 1.1% and 0.9% respectively for these months.
This is reflected by a fall in consumer confidence. In a survey of 2,003 respondents carried out between July 19 and July 22 by Longitude Research on behalf of Barclaycard, just 29% of UK adults said they felt positive about the state of the UK economy.
Almost a quarter (23%) said they are uncertain about their job security – the highest this figure has been in over two years. And just 54% said they are confident in their ability to spend on ‘non-essential’ items: a drop of six percentage points from June. Furthermore, almost a third (32%) said they are holding off on making a major purchase until the economy becomes more settled.
Barclaycard director Esme Harwood commented: “Spending has remained relatively subdued over the past few months, with an underlying uncertainty about the wider economic and political landscape causing many to hold off making purchases on bigger ticket items.
“However, on a brighter note, box office hits have helped boost spending as consumers continue to prioritise dining out and enjoying trips to the cinema and theatre this summer.”