Card spending grows 1.4 percent in July, as stable confidence in household finances and mixed weather boost non-essentials

• Clothing performed strongly, up 4.2 percent, contributing to a 1.9 percent growth in retail
• Confidence in household finances held strong at 72 percent, after reaching a four-month high in June 
• One in three consumers are using AI tools such as ChatGPT to support planning and budgeting, rising to seven in 10 among Gen Z
• Live shows and concerts rose 9.3 percent, peaking on 10^th July, when general release tickets to Lewis Capaldi’s 2025 tour went on sale
• The Barclays Consumer Spend report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending

Consumer card spending grew 1.4 percent year-on-year in July, up from -0.1 percent in June, but remaining below the latest CPIH inflation rate of 4.1 percent. Essential spending declined -0.7 percent, however discretionary spend rose by 2.4 percent – an increase from June’s 0.8 percent growth – as changeable weather led shoppers to spend on both sunny and rainy-day activities and items.

The overall retail category had a positive month, up 1.9 percent, after marginal growth of 0.2 percent in June. This was propped up by clothing which grew 4.2 percent, its greatest increase since September 2024. This comes as almost one in five (16 percent) UK adults said they bought more summer clothes and accessories in July, while a quarter (26 percent) said July’s changeable weather impacted their spending decisions.

The growth in online retail spending (excluding groceries) reached 4.9 percent, up from 2.4 percent in June. Shoppers made the most of discounted items and sales events, with a fifth (21 percent) spending more than they had expected and 11 percent planning ahead by purchasing early Christmas gifts.

Pharmacy, health and beauty performed strongly, up 9.8 percent, while continuing to benefit from the enduring post-COVID “lipstick effect” – where shoppers turn to small and affordable luxuries to boost their mood. Furniture store sales also increased by 6.7 percent, marking the category’s eighth consecutive month of growth.

Confidence in household finances holds strong

Confidence in the strength of the UK economy dipped once again in July, falling three points month-on-month, to 22 percent, the lowest level seen since January (21 percent), having reached a 2025-peak in May, at 28 percent. Despite this, consumers remain confident in their ability to live within their means. This measure held firm at 75 percent, just one point below the 76 percent recorded in June, and five percentage points higher than July 2024 (70 percent). Confidence in household finances also stabilised at 72 percent, down marginally from 73 percent in June, but up seven percentage points year-on-year, from 65 percent.

A focus on budgeting is likely contributing to the stability of these figures. A third (34 percent) are building a savings buffer in case costs rise (equal to June), while seven in 10 (71 percent) have been making financial adjustments in light of the current economic outlook (up two points month-on-month).

Gen Z leading AI money management

Amid the meteoric rise of artificial intelligence tools such as ChatGPT and Gemini, consumers are making use of AI to help with managing their money. Over a third (35 percent) of UK adults have used AI tools to help them plan, budget and/or analyse their spending, rising to seven in 10 (69 percent) among Gen Z.

Gen Z also turn to AI the most frequently for money management, with almost half (45 percent) of users reporting weekly use and 84 percent using the tools at least once month. Across all age groups, the most popular use cases are to: compare prices, discounts and deals (12 percent); research products and services (11 per ent); and create budgets (10 percent).

Live shows lift entertainment 

Entertainment spending was up 7.4 percent in July, below June’s 8 percent, but ahead of the overall hospitality and leisure sector’s 2.7 percent growth. Spending on live shows and concerts increased 9.3 percent, above the 2.5 percent recorded in June. The busiest day of the month for the category was 10^th July, when general release tickets to Lewis Capaldi’s 2025 tour went on sale. Cinema spend, up 1.6 percent overall, peaked on 5^th July, following the release of Jurassic World Rebirth a few days earlier, on 2^nd July.

Small screen viewing resulted in an 8 percent uplift for digital content & subscriptions, helped by nostalgic fans streaming the live action remake of Lilo & Stitch and highly-anticipated sequel Happy Gilmore 2.

Karen Johnson, Head of Retail at Barclays, said: “The summer sales, changeable weather and shoppers seeking the “feel-good factor” led to a strong July for retailers, particularly among beauty, clothing and furniture stores. While confidence in the UK economy remains subdued, prudent money management, supported by the growing popularity of AI tools to help with budgeting is contributing to a continued resilience in personal and household finances.”

Will Hobbs, Managing Director, Barclays Private Bank and Wealth Management, said: “Despite what public debate might suggest, there are a number of reasons to be positive about the current performance of the UK economy. Real (inflation adjusted) household incomes continue to grow, while the consumer’s balance sheet remains in good order in aggregate. July admittedly only saw marginal spend growth, but the trend is healthier.

Confidence is the key to unlocking the UK’s still restrained spending power. While this is clearly a difficult factor to forecast, longer history suggests a bias towards optimism is well supported. Doom sells, but the outlook for the UK has more going for it than widely realised, with a revitalised Europe particularly important given the role of proximity in economic growth.”

Image courtesy of Unsplash. Photo credit: Nik.