Consumers cut back to save for festive season

10th October 2023

Latest credit card spending figures from Barclays have shown a shift towards saving. The data shows that consumers are cutting back on eating out and reining in on buying takeaways to save up for the expensive the Christmas season season.

Consumer card spending grew 4.2 per cent year-on-year in September – less than the latest CPIH* inflation rate of 6.3 per cent but higher than August’s growth figure of 2.8 per cent – as the late summer sun boosted in-store spending. Meanwhile, the Rugby World Cup drove spending at pubs and bars, yet growth slowed on restaurants and takeaways as Brits begin saving money for the festive period.

Spending on essential items grew 4.6 per cent, considerably higher than last month (1.0 per cent). This was largely due to an upswing in fuel spend (-10.9 per cent versus -20.1 per cent in August) driven by rising petrol and diesel prices, as well as a 7.0 per cent uplift in spending on groceries, which was higher than August’s growth (4.5 per cent).

While food price inflation has eased in recent months, more consumers in September (70 per cent) said they were finding ways to reduce the cost of the weekly shop compared to August (67 per cent). Of this group, almost half (49 per cent) are buying budget or own-brand goods over branded goods in supermarkets. A further 52 per cent of adults are taking advantage of multibuy deals, bundle offers and/or buying items in bulk to reduce costs.

The rising cost-of-living continues to impact spending on restaurants, which saw further decline in September (-10.8 per cent compared to -5.8 per cent in August). This comes as 44 per cent of Brits said they are planning to reduce in discretionary spending over the next couple of months to save money for the upcoming festive period, with eating out at restaurants the most frequently cited cutback (60 per cent).

Seasonal savers are also planning to row back on food deliveries (59 per cent), which may explain why the growth in spending on takeaways and fast food (6.5 per cent) remained flat compared to August (6.4 per cent) and well below H1’s data (consistently above 9 per cent).

One of the reasons for these Autumn savings is that two in five (40 per cent) Brits say they expect that this coming Christmas/festive period will be more expensive than last year. To help spread the cost, a fifth (20 per cent) has started to buy presents already, while 18 per cent have spoken to loved ones to make a mutual agreement to cut back on gift-giving.

Esme Harwood, Director at Barclays, said “Grocery spending tapered off over the summer, thanks to the long-awaited drop in food price inflation. Worryingly, growth sped up again in September, which could be an early warning sign that food prices may not come down as quickly as we’d hoped.”

“Eagle-eyed shoppers have spotted more examples of “surge pricing” and “shrinkflation”, and are becoming sceptical about the value of supermarket loyalty schemes. Consumers are also starting to pull back their spending in some non-essential areas, so that they can put more money aside for the festive season.”

Jack Meaning, Chief UK Economist at Barclays, said “Over the last few months a picture has been building of consumers beginning to pull back on discretionary spending as the cost of living, and monetary tightening from the Bank of England increasingly bite. We’ve seen the warning signs from surveys, and now we see it in the more concrete spending data.”

“This suggests the outlook for consumers, and the businesses that rely on them, is weak, even as they finally see their disposable incomes rise faster than inflation. It makes it hard to see anything but a relatively stagnant economy on the horizon.”