Credit, Collections & Insolvency News
Spending on debit and credit cards rose by 4.1% in 2023 according to latest data from Barclays.
Card spending was noticeably lower than the growth seen in 2022 (10.6 per cent) as consumers cut back on new clothes, eating out and home improvements amid rising inflation and household bills. However, consumers continued to prioritise moments of joy and shared experiences, boosting travel, entertainment, and pubs & bars.
Spending on essential items grew 3.9 per cent in 2023 compared to 6.3 per cent last year. This reduced increase was largely due to a -10.7 per cent drop in fuel spend, stemming from the decline in pump prices this year after they peaked following Russia’s invasion of Ukraine in early 2022.
Rising food price inflation fuelled a 6.5 per cent increase in supermarket shopping, while food and drink specialist stores returned to growth (4.4 per cent) following a -1.1 per cent decline last year.
Discount supermarkets performed particularly well, accounting for 15.5 per cent of all grocery spending – an all-time high, up from 14.5 per cent in 2022 – as savvy shoppers looked for ways to reduce the cost of their weekly shop amid rising prices. This behaviour peaked in September, when seven in 10 (70 per cent) claimed to be looking for cutbacks – over half (53 per cent) of these consumes were paying closer attention to price rises on specific items, 49 per cent were buying budget or own brand goods over branded goods, and the same proportion (49 per cent) were opting for more budget or value ranges1.
“Shrinkflation” and “skimpflation” emerged as the main scourges of supermarket shoppers in 2023. At its peak in September, 76 per cent of consumers had noticed examples of shrinkflation, with chocolate (48 per cent), crisps (41 per cent), packs of biscuits (38 per cent) and snack bars (31 per cent) the most cited products impacted by this trend.
In addition, more than one in five Brits (22 per cent) in July noticed that shrinkflation was also affecting alcoholic drinks, finding that some of the drinks they were buying – such as beers, spirits and tinned cocktails – were becoming weaker or containing less alcohol, yet still costing the same or more.
Meanwhile, over half (52 per cent) of shoppers in August noticed that some of the food and drink products they were buying had been downgraded in terms of the quality or quantity of premium ingredients, yet still cost the same or more than they used to – otherwise known as “skimpflation”. These shoppers had mostly noticed the declining quality of clothing, chosen by 44 per cent, closely followed by toilet paper (43 per cent), and toiletries/cosmetics (37 per cent).
Esme Harwood, Director at Barclays, said “Brits prioritised memorable experiences and shared moments with loved ones this year, boosting pubs, travel and entertainment. Many were keen to make up for lost opportunities during the pandemic by booking holidays, treating themselves to concert tickets, and enjoying nights out with friends.
“However, certain sectors saw noticeable cutbacks. Restaurants and clothing stores were hampered by the unpredictable weather, as well as the impact of rising household bills on consumers’ personal finances. Nonetheless, Brits’ confidence in their ability to spend within their means has remained resilient, as they become more resourceful and adept in finding ways to balance their budgets.”
Jack Meaning, Chief UK Economist at Barclays said “Although 2024 will be a tough year for the economy as a whole, the New Year is a time to look for the positives. We expect to see the Bank of England start easing interest rates from the middle of the year, and in fact, we’re already seeing mortgage rates come down in anticipation. This is as the speed of price rises slows, which should continue to provide at least some boost to the spending power of people who have been squeezed through the cost-of-living crisis. 2024 will be a year of transition, from headwinds to tailwinds, but come next December we should be able to toast the New Year with more festive spirit.”