Card spending falls for the first time in more than three years

Card spending fell last month for the first time in more than three years, according  latest analysis by Barclays.

The data showed that consumer card spending fell -0.6 per cent year-on-year in June – the first decline since February 2021 and significantly lower than the latest CPIH inflation rate of 2.8 per cent – as colder weather early in the month hampered spending at clothing stores, pubs and garden centres. 

The cold in early June 2024, in contrast to 2023’s sunshine and warm weather, meant that retail spending fell by -2.6 per cent –  its most significant year-on-year drop since June 2022 (-3.8 per cent). High-street cutbacks meant in-store spending (excluding groceries) was down -5.1 per cent, while clothing sales declined -7.7 per cent year-on-year.

This comes as two in five (39 per cent) Brits said they have spent less than usual on summer products this year, due to the weather, with clothes (55 per cent) emerging as the most common cutback, followed by barbecue food and equipment (40 per cent).  Consumers also delayed home and garden renovations due to the cold snap, as spending on home improvements and DIY declined -9.4 per cent, while garden centres saw a steeper drop of -12.7 per cent.                                 

Supermarket spending recorded its first decline (-2.6 per cent) in two years, which comes as the majority of consumers (65 per cent) say they’re cutting back on their weekly grocery expenditure. Over half (52 per cent) of these budget-conscious shoppers are looking out for loyalty scheme discounts and supermarket deals.

The slowdown can also be attributed to the drop in food price inflation, which has now fallen to its lowest level since October 2021 at 1.7 per cent. Encouragingly, over a third (36 per cent) of shoppers say they have noticed food prices have been rising at a slower rate in recent months.

Pubs, bars and clubs saw modest year-on-year growth in June (up 0.5 per cent), with the influx of sports fans watching The Euros outweighing the bad weather, and keeping the category on par with its strong performance in June last year.

However it was a tougher month for restaurants, which declined -11.5 per cent year-on-year, although this was an improvement on last month (-15.7 per cent), reflecting the selective approach cost-conscious consumers are taking to discretionary spending; over half (52 per cent) of those cutting back on non-essential spending are choosing to spend less on eating out at restaurants.

The entertainment and travel sectors also enjoyed growth in June, mirroring new data from Barclays’ ‘All to play for: winning with experience’ report which revealed that experiences like travel and live entertainment are now taking up a greater share of Brits’ discretionary spending.

Entertainment rose 6.1 per cent, while cinemas enjoyed their busiest day of the year so far on 15th June, up 122.4 per cent in comparison to the average day in 2024, after the release of ‘Inside Out 2’ . Meanwhile, spending on holidays abroad continued to grow, with travel agents and airlines up 5.5 per cent and 3.2 per cent respectively, as some holidaymakers settled the final costs for their getaways. Overseas travel outpaced staycations, demonstrated by domestic hotels, resorts and accommodation recording a decline of -1.8 per cent.

This comes as 37 per cent of Brits say that when they go on holiday, they tend to spend more than they had planned to, while a fifth (20 per cent) adopt a “treat yourself” attitude when travelling.

Encouragingly, while Brits maintain a steady approach to managing their budgets, consumer confidence showed signs of recovery compared to the previous month. Consumers feel more optimistic about their ability to live within their means (up to 73 per cent) and spend more on non-essential items (56 per cent), while confidence in job security increased four percentage points to 49 per cent. Meanwhile, concerns about inflation fell by one percentage point, to 85 per cent, while concerns about the rising cost of fuel eased, as spending on fuel declined -3.2 per cent.

Karen Johnson, Head of Retail at Barclays, said “Once again, our data demonstrates the undeniable impact that unseasonable weather can have on consumer spending. The sluggish demand at the start of June even caused some fashion brands to adjust their sales schedules, although I was pleased to see that the situation has since improved with the arrival of sunnier days.

“However, the dreariness didn’t dampen spending across the board, with takeaways, digital content and entertainment all benefitting from people sheltering at home, and hopefully we’ll see sustained interest in The Euros – regardless of England’s fate – and sunnier weather driving people to their local in July.”

Jack Meaning, Chief UK Economist at Barclays, said “While June’s data suggests a weak month, the view looking ahead to the second half of the year, as we see it, is one of falling interest rates, growing real incomes, and increasing confidence among consumers to spend and businesses to invest, particularly now that the uncertainty of the general election is out of the way.”