- Rising petrol prices led to a 29.9 per cent jump in fuel spending, while utility bills climbed 43.9 per cent
- Electronics retailers performed particularly well as consumers bought gadgets to keep cool during the heatwave
- While still in growth, hospitality and international travel saw month-on-month declines as Brits cut back on holiday and social plans to offset higher outgoings
- A trend towards more frequent grocery trips with less spend per visit emerges, with two in five shopping on a need-to-buy basis to save money and avoid waste
- This comes as nine in 10 report noticing that prices of core supermarket staples have increased since June
- The Barclaycard report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending
Consumer card spending grew 7.7 per cent in July compared to the same period in 2021, and 1.6 per cent compared to June 2022, as Brits spent more on clothing, beauty and staycations as the summer holiday period began. However, consumers are starting to cut back on overseas travel and eating and drinking out, as disposable income falls and wage growth is outpaced by inflation.
Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items rose 7.0 per cent year-on-year, greater than the 4.0 per cent rise recorded in June. The increase was driven largely by fuel and supermarket shopping, both of which saw year-on-year growth (29.9 per cent and 2.1 per cent respectively), as the prices of petrol, diesel and everyday items continued to climb. Meanwhile, average spending on utility bills rose 43.9 per cent year-on-year, even higher than last month’s growth of 39.6 per cent.
At the supermarket, almost nine in 10 (89 per cent) Brits report seeing increases in the prices of everyday items, with the majority noticing that butter (53 per cent), milk (51 per cent) and meat (47 per cent) are more expensive than they were in June.
This comes as 45 per cent of shoppers say they are looking for ways to get more value from, or to reduce the cost of their weekly shop. Over half (52 per cent) of this group are paying closer attention to the prices of items they buy regularly, and the same proportion (52 per cent) are cutting down on luxuries or one-off treats for themselves.
In addition, nearly two fifths (37 per cent) are purchasing certain items on a need-to-buy basis to save money and avoid waste, resulting in an emerging trend for smaller basket sizes, and more frequent trips to the supermarket to restock when items run out. The average value of a supermarket transaction has dropped from £23.67 in January 2021 to £19.33 in July 2022, while the average number of monthly supermarket purchases per person increased from 8.70 to 11.91 over the same period.
Meanwhile, spending on non-essential items rose 8.0 per cent year-on-year, as well as 1.3 per cent month-on-month, with a likely combination of inflation, the hot weather and summer and school holidays giving rise to increased discretionary spending across a range of categories.
Clothing retailers saw particularly positive uplifts of 8.7 per cent year-on-year and 4.0 per cent month-on-month, while pharmacy, health & beauty stores also saw strong growth of 8.6 per cent and 3.1 per cent over the same timeframe.
The July heatwave also boosted sports and outdoor retailers, up 1.7 per cent compared to June, and electronics stores where spending jumped 8.6 per cent. This comes as 55 per cent of Brits say they bought items to keep cool in the hot weather, with electric tower fans (17 per cent) the most in-demand.
General retailers were another bright spot, recording rises of 5.5 per cent month-on-month and 0.5 per cent year-on-year, with a portion of that growth directly attributed to Amazon’s recent Prime Day. Meanwhile, discount stores grew 3.1 per cent and 3.3 per cent over the same period, as more Brits looked for ways to balance their budgets.
The eating and drinking category was up 9.0 per cent year-on-year, yet it saw a slight decline (-1.5 per cent) compared to the previous month. The month-on-month drop is partly a reflection of how well the sector performed in June, owing to the Queen’s Platinum Jubilee weekend. However, demand has also been falling due to the cost-of-living squeeze; almost three in 10 (29 per cent) Brits say they plan to spend less on social plans and days out this summer, with 67 per cent of this group cutting back on eating out at restaurants, and 55 per cent spending less at pubs, bars and nightclubs.
Travel agents and airlines also continued to see year-on-year growth (204.0 per cent and 112.7 per cent respectively), however both categories were down month-on-month (-3.8 per cent and -3.0 per cent). This is likely due to the ongoing disruption across the aviation sector, as well as the 20 per cent of Brits who are choosing not to summer holiday abroad this year, and the 16 per cent instead opting to take a break in the UK. The popularity of staycations is driving spend in the hotels, resorts & accommodation category, which grew 1.9 per cent compared to June.
Looking at consumer confidence levels, encouragingly, more Brits are feeling confident about their household finances (66 per cent versus 59 per cent reported last month), their ability to spend on non-essential items (54 per cent versus 48 per cent), and their ability to live within their means (71 per cent versus 66 per cent). However, confidence in these areas remains below where it stood in July 2021 (72 per cent, 62 per cent and 75 per cent respectively).
Meanwhile, the data also shows nine in 10 (91 per cent) are concerned about rising inflation, surging household bills and higher food prices, while confidence in the future of the UK economy remains low at 26 per cent.
José Carvalho, Head of Consumer Products at Barclaycard, said: “July saw Brits get into the swing of summer by prioritising non-essential spending on staycations, new clothes and beauty products, while the heatwave gave an extra boost to the electronics sector, as consumers bought gadgets to keep cool.
“However, inflation continues to have a noticeable impact, with price rises forcing shoppers to spend more on essential everyday items such as fuel, butter and milk, and to cut back on some discretionary experiences such as meals and drinks out, and holidays abroad.”
“We know that this is a really challenging time for many consumers, so it is reassuring to see that more Brits are feeling confident about their household finances and ability to live within their means each month. This shows that, faced with difficult circumstances, many are finding ways to budget and manage their finances successfully, to cope with ongoing inflationary pressures.”