Consumer spending grew 5.5 per cent in April as inflation drives up cost of everyday essentials

Consumer spending grew 5.5 per cent in April as inflation drives up cost of everyday essentials

  • Consumer spending rose 5.5 per cent year-on-year in April driven by inflation on essentials and a later Easter in 2017
  • Essential item expenditure grew 11.4 per cent, partially due to an ‘Easter bounce’ in supermarket spending (10.3 per cent) and another strong month for petrol (14.7 per cent)
  • Although meals out during the bank holiday led to rises in pubs (20.4 per cent) and restaurants (16.5 per cent), non-essential spending overall only increased by 3.7 per cent
  • The proportion of consumers feeling confident in their household finances dipped 14 percentage points to 56 per cent from 70 per cent in March – with two-thirds of Brits saying they are focusing more on getting value for money on purchases

Consumers spent 5.5 per cent more year-on-year in April as a late Easter and inflation drove noticeable uplifts across a number of categories. Shoppers also continued to spend on the ‘experience economy’ – prioritising time with friends and family despite the higher cost of day-to-day necessities. 

Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows high levels of growth across everyday essentials with Brits spending more on groceries in particular, pushing supermarket growth to 10.3 per cent. This double digit rise, however, was underpinned by the later timing of Easter relative to 2016 and by inflation, which rose to a 42-month high of 2.3 per cent in March.

The buoyant growth in the supermarket sector, and another strong month for petrol, which remained high at 14.7 per cent, meant that spending on essential items soared to 11.4 per cent – comfortably the highest level seen since Barclaycard began compiling data in 2012.

Barclaycard also saw a concurrent rise in discount store spending (16.6 per cent), indicating more shoppers are looking for bargains, potentially in a bid to save some cash in the household budget where possible as the cost of everyday goods increased.

Despite this, and perhaps because of the extra days off work, shoppers were still willing to loosen the purse strings when it came to spending on ’the experience economy’. While growth in discretionary categories slowed overall, up 3.7 per cent in comparison to March’s 4.8 per cent, entertainment remained a bright spot (up 15 per cent) as Brits took advantage of the bank holiday weekend to dine out with friends and family in pubs (up 20.4 per cent) and restaurants (up 16.5 per cent).

DIY stores and garden centres also performed strongly, rising 26.6 per cent and 7.7 per cent respectively, as shoppers took advantage of the ‘mini-heatwave’ early on in the month to spruce up their homes and gardens.

Research undertaken for Barclaycard amongst consumers found that this ‘business as usual’ approach to spending is likely to continue in many categories; four in 10 (40 per cent) say that the value of the pound will not affect their summer holiday plans, and one in five (21 per cent) plan to spend more on experiences over physical things in May.

There is evidence, however, of a broader fall in perceived spending power as a result of inflationary pressures, with just over half (56 per cent) of Brits indicating they feel confident in their household finances – down from 70 per cent who said the same in March. Many are looking to adjust their spending to counteract the rising prices of everyday goods, with two-thirds of Brits (67 per cent) saying they have become much more careful to seek out value for money in the purchases they make, the second-highest figure in the past 12 months.

Paul Lockstone, Managing Director at Barclaycard, said:

“A late Easter and rising prices provided a superficial boost to spending in April, but behind the headline figure it’s clear consumers are recognising and responding to the inflationary pressures being placed on household budgets. Despite growth across a number of categories, the spending picture in real terms is one of growing caution, as seen by declining confidence levels amongst the UK’s consumers.

“The relatively dry and warm weather was a natural benefit to pubs, restaurants and garden centres, giving consumers the opportunity to treat themselves where they felt comfortable doing so. With a renewed focus on value for money it is likely that consumers will need to make necessary adjustments to their monthly budgets in a bid to balance essential and discretionary spending.”

 

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