Consumer card spending up but confidence going down

However, ongoing supply chain shortages and rising food and energy prices have hampered consumer confidence.

The September report data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items increased 14.4 per cent – the highest uplift in more than two years.

This was driven by supermarket shopping (+14.7 per cent), as well as a surge in demand at the pumps and climbing petrol and diesel prices, causing the sharpest growth in fuel spend in over 24 months (+11.1 per cent).  

Non-essential items had a smaller uplift than in August, yet pubs, bars and clubs and entertainment saw significant boosts as office workers enjoyed evenings out.

However, worries about inflation persist, with 90 per cent concerned that the rising cost of everyday items will negatively impact their household finances.

The report also noted that consumers are finding it harder to source some essentials in supermarkets and grocery stores. Almost half (46 per cent) have reported seeing empty spaces on the shelves and 18 per cent have found it harder than usual to find fresh fruit and vegetables.

A further 13 per cent have also found it difficult to purchase soft drinks, frozen goods and fresh fish and meat.

While spending on non-essential items grew 12.9 per cent last month, the increase was slightly smaller than in August (+15.8 per cent), which given rising inflation may also indicate that some consumers are starting to cut back on discretionary purchases.

The number of Brits who felt confident in their ability to buy non-essential items fell 4 percentage points in September (59 per cent, compared to 63 per cent in August) – the lowest this figure has been since February 2021, during the third national lockdown.

Consequently, some shoppers are already seeking out value in the purchases they make, as discount stores saw a 29.3 per cent uplift compared to 2019.

A further 56 per cent of Brits suggest that if energy prices rise sharply, it will make it harder for them to spend money on nice-to-have items.

The rising cost of everyday items is also causing 90 per cent of consumers to be concerned about the impact on their household finances, and in turn those who feel optimistic about the economy has fallen month-on-month (31 per cent in comparison to 37 per cent in August).

However, many sectors also saw considerable growth in September, owing in part to workers returning to offices, the onset of a new school term and preparations for the winter months with home improvements and purchases of warmer clothing.

Pubs, bars and clubs benefited from a 43.5 per cent boost as colleagues reunited at post-work gatherings, while entertainment saw its strongest growth in more than two years (+28.0 per cent), with new film releases, gigs and theatre shows encouraging Brits back to venues.

Home improvements and DIY were up 24.1 per cent and department stores and pharmacy, health and beauty retailers rose 3.6 per cent and 17.5 per cent respectively – the sharpest increases for both categories since May 2021.

Although still in decline, travel agents (-45.4 per cent) and airlines (-49.5 per cent) had month-on-month improvements (compared to -53.3 per cent and -53.0 per cent in August), as holidaymakers booked overseas trips to enjoy the end of summer.

Raheel Ahmed, head of consumer products, said the return of pupils and workers to schools and offices helped many sectors see strong uplifts in September.

“Pubs, bars and clubs and the entertainment industry benefitted from post-work socialising, while international travel was given a boost as holidaymakers jetted off to warmer climes to squeeze in their last trips of summer,” he said.

“Consumers are, however, starting to feel the impact of rising prices on their personal finances, which is also hampering confidence levels. While this is causing some Brits to seek out value in their purchases, as the festive season approaches, we expect spending to gradually gather pace as shoppers start buying gifts and preparing for gatherings with loved ones.”