UK consumer spending growth slows as rising living costs bite

UK shopper spending development slowed at first of the yr as rising dwelling prices and restrictions imposed to comprise the excessive variety of coronavirus infections restricted social exercise, based on financial institution transaction knowledge.

Client card spending rose 7.4 per cent in January in contrast with the identical interval in 2020, earlier than the primary coronavirus restrictions, the smallest uplift since April 2021, figures from funds firm Barclaycard confirmed on Tuesday.

The determine, which tracks practically half of all UK credit score and debit card transactions, was down from a 12 per cent enhance in December and 16 per cent in November.

Jose Carvalho, head of shopper merchandise at Barclaycard, stated: “January’s Covid restrictions, mixed with the rise in the price of dwelling, clearly impacted shopper spending ranges.”

Spending on hospitality and leisure slipped right into a 6 per cent contraction after 5 consecutive months of development. The autumn was partially pushed by a 17 per cent contraction in restaurant spending, down from 14 per cent in December. All figures discuss with a comparability with the identical interval two years earlier, earlier than the pandemic.

The journey sector was additionally affected by the federal government’s “Plan B” restrictions, with public transport seeing a steeper decline than final month as working from residence steerage resulted in folks delaying their return to the workplace.

Total, spending development on non-essentials was halved in contrast with December. Spending on important objects, equivalent to groceries and gas, grew 10 per cent, the smallest enhance since April 2021.

Barclaycard additionally revealed in its month-to-month shopper survey revealed alongside the spending knowledge that just about 9 in 10 Britons stated they have been involved concerning the affect of rising inflation on their family funds. About three in 10 stated they anticipated growing family payments to have an effect on the quantity they spend on discretionary purchases.

This nervousness threatens the restoration of UK shopper spending, which has helped drive the financial rebound from the pandemic. The headline decline may cover an excellent larger slowdown because the figures should not adjusted for inflation, which rose to the best stage in 30 years in December.

The identical is true for UK retail gross sales figures for January, revealed on Tuesday by the British Retail Consortium, an trade group. It reported that gross sales have been up 7.5 per cent in contrast with the identical month in 2020, however warned {that a} “portion of the gross sales development can be a mirrored image of rising costs slightly than elevated volumes”.

Helen Dickinson, BRC chief govt, stated that within the coming months retailers would face competitors from different spending alternatives as the general public floods again to eating places, cafés and dwell occasions. Furthermore, she famous that “rising inflation, pushed by greater prices of manufacturing, greater power and transport costs, in addition to different looming worth hikes this spring will imply shoppers should tighten their purse strings”.