Consumer spending climbs

14th July 2021

Consumer spending figures from Barclaycard show that activity in June was 11.1% higher than in the same month of 2019.

Barclaycard said spending on fuel, hotels, resorts and accommodation all grew for the first time since the pandemic began. Spending at pubs and bars rose by 38.1% as customers opted to watch big sporting events, while spending on fuel increased by 3.6%. While the report shows that face-to-face retail grew 9.7%, there were signs that pent-up demand was easing off, with clothing and furniture stores recording smaller increases than in May.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 14.7 per cent – the sharpest rise since before the start of the pandemic in March 2020. This was driven by strong uplifts in supermarket shopping (19.0 per cent) and spending at specialist food and drink stores (76.4 per cent) – including butchers, bakeries, and off-licenses – as the nation kicked off the summer with BBQs and picnics.

Non-essential items performed strongly overall, rising 9.4 per cent – the largest growth in non-essential spend since the onset of Covid-19. This was boosted by the eating and drinking category, which grew 36.7 per cent compared to the same period in 2019, while also representing a strong month-on-month uplift (+2.5 per cent in May 2021).

Restaurants also showed early signs of recovery, experiencing a relatively low fall in growth (-8.4 per cent) when compared to the 74.4 per cent and 53.2 per cent declines recorded in April and May. This trend looks set to continue over the summer as restrictions ease, with consumer confidence data finding that 22 per cent of Brits upped their spending on meals and drinks out on sunnier days.

There were also glimmers of hope for the UK travel industry; the hotels, resorts and accommodation category saw its first growth (5.4 per cent) since pre-pandemic times, as Brits continued to holiday in the UK. However, many remain cautious about overseas travel, with the traffic light system restrictions continuing to impact travel agents and airlines, which saw respective decreases of 75.3 per cent and 70.9 per cent.

Face-to-face retail also saw positive growth in June (9.7 per cent), with uplifts across a range of categories including home improvements & DIY stores and sports & outdoor retailers with increases of 21.6 per cent and 14.2 per cent respectively. However, there were signs that pent-up demand following lockdown is easing off, as clothing and furniture stores recorded smaller increases, rising by 2.8 per cent and 26.3 per cent, compared to 8.5 per cent and 55.7 per cent in May 2021.

Entertainment, which includes cinemas, bowling alleys and golf courses, also showed signs of recovery as Brits enjoyed outdoor activities and more leisure venues opened, with just a 1.7 per cent decline – a noticeable improvement on the 28.6 per cent drop last month. The data shows that consumers aged 65 and over have been driving this improvement, with their spending increasing 4.7 per cent compared to 2019 – perhaps a reflection of rising levels confidence among this age group.

Confidence in household finances and the UK economy has also held up at 70 per cent and 36 per cent respectively, as over half (55 per cent) of those feeling optimistic about the economy cite the vaccine roll-out as the main reason for their positive outlook.

Almost two thirds (64 per cent) of Brits feel the prices of everyday items are higher than they used to be, which could be attributed to the recent rise in inflation, or perhaps a shift in the perception of the cost of living as we transition back to normality following months of lockdown and restricted spending.

Raheel Ahmed, Head of Consumer Products at Barclaycard said “June saw Brits flock back to pubs, bars and beer gardens to watch the football and tennis on the big screens, as the heatwave early in the month encouraged many of us to get out in the sunshine and socialise.

“The start of the Olympics and the expected easing of restrictions later this month should continue to lift spirits and provide more opportunities for get-togethers, whether that’s a weekend break, a meal out or to celebrate sporting victories. It’s great to see Brits making up for lost time over the past year.”