Consumers start to cut back on spending to combat rising cost of living

Consumer spending and the number of transactions made by households fell in June, according to Nationwide Building Society’s Spending Report. The latest data is the first real indication of how the cost-of-living crisis is pushing households to cut back on costs while they can.

The latest spending data comes as Nationwide prepares to launch support for those experiencing financial difficulty. This includes a freephone cost-of-living hotline that will be rolled out in August and answered by experts who will also proactively call members who are struggling financially.

Nationwide’s monthly Spending Report shows overall spending fell four per cent month-on-month in June to just over £8 billion, driven by a six per cent drop in non-essential spending and three per cent drop in essential spending compared to May. Overall, there were around 217 million transactions made in June (down from around 226 million in May), with essential spend transactions down three percent and non-essential down by five per cent versus the previous month.

Essential spending snapshot:  Spending on fuel and electric vehicle charging was the only category to see a month-on-month rise. June accounted for just over £3.6 billion according to the report – representing a fall of £123 million compared to May. All essential spend categories saw a fall, except for fuel and electric car charging which saw a three per cent month-on-month increase. With more than £312 million spent, fuel and electric car charging spending in June is up by a third (33%) compared to the same month last year.

Non-essential spending snapshot: Nearly every non-essential spending category saw a month-on-month fall in spending during June – from eating out and subscriptions to gardening and gambling. Spending on non-essential items fell back below the £3 billion mark with around £165 million less spent during June and around five million fewer transactions as people balance enjoying the summer and their finances. Overall, more than £2.8 billion was spent on non-essential purchases in June – a six per cent fall on May. At around 96 million, the number of non-essential transactions is also down five per cent on May.

Mark Nalder, Head of Payments at Nationwide Building Society, said “Following a peak in spending during May, our data suggests households have started to cut back across the board and where they can.  This is happening as we enter the summer period where customers will want to enjoy themselves, so it will be interesting to see how these often-conflicting interests are balanced.  As we head into the holiday season, we expect budgeting to continue being a feature as the nation prepares for even higher costs with inflation continuing to climb and the energy price cap rising again this autumn.”

Spend category	Total spend in June 2022 (£)	% Change vs May 2022	% Change vs June 2021	Total transactions (June 2022)	% Change vs May 2022	% Change vs June 2021
Childcare	3,223,249	-5%	45%	113,741	-11%	33%
Debt	559,010,556	-9%	2%	2,867,049	-8%	-3%
Discount stores	98,059,540	-4%	2%	4,541,739	-3%	2%
Fuel/electric vehicle charging	312,472,881	3%	33%	10,004,604	-1%	7%
Insurance	225,660,276	-2%	-2%	4,896,224	-2%	-1%
Mortgage payments	173,920,127	0%	7%	288,074	-2%	1%
Motoring	204,764,624	-4%	-12%	1,542,974	0%	1%
Pets	43,868,973	-3%	6%	952,664	-5%	3%
Rent payments	18,362,501	-4%	5%	79,151	-5%	-3%
Supermarkets	985,308,143	-2%	4%	55,240,168	-2%	12%
Travel	116,751,243	-5%	54%	11,766,563	-5%	30%
TV, phone & broadband	253,313,990	-6%	0%	7,174,199	-6%	-2%
Utilities & Bills	621,649,599	-2%	17%	7,025,211	-3%	4%
TOTAL	3,616,365,701	-3%	7%	106,492,361	-3%	10%

 

Spend category	Total spend in June 2022 (£)	% Change vs May 2022	% Change vs June 2021	Total transactions (June 2022)	% Change vs May 2022	% Change vs June 2021
Airline travel	56,643,904	-13%	244%	373,286	6%	266%
Charities	46,465,683	-5%	5%	2,218,257	-3%	10%
Clothing/Shoes	236,819,496	-5%	11%	5,406,135	-4%	7%
Cruises	14,035,066	3%	307%	53,674	12%	165%
Dating	1,183,805	-2%	-10%	47,542	-5%	-27%
Digital Goods	46,497,153	-5%	21%	5,430,971	-5%	13%
DIY/home improvements	263,554,310	-8%	-8%	3,939,440	-7%	-1%
Eating/Drinking	498,592,952	-5%	18%	36,000,681	-6%	23%
Gambling	188,943,048	-12%	-6%	7,833,552	-10%	4%
Gardening	27,681,770	-28%	-17%	837,455	-23%	-12%
General retail/dept stores	277,597,659	-4%	-1%	9,742,141	-4%	-5%
Health/Beauty	185,830,922	-3%	8%	5,708,574	-1%	16%
Holidays	337,630,882	-3%	90%	2,117,669	-1%	45%
Leisure/recreation	165,903,185	-2%	17%	5,565,396	-2%	20%
Other shops	475,534,629	-4%	1%	9,202,736	-2%	4%
Subscriptions	18,533,467	-9%	-3%	1,541,442	-7%	1%
TOTAL	2,841,447,931	-6%	13%	96,018,951	-5%	12%

WAYS TO PAY (June 2022)
	Total spend in June 2022 (£)	% Change vs May 2022	% Change vs June 2021	Total transactions (June 2022)	% Change vs May2022	% Change vs June 2021
Debit card	4,918,659,393	-5%	8%	175,014,473	-4%	13%
Credit card	755,198,298	-2%	16%	14,932,389	-2%	9%
Card contactless	1,036,743,005	-4%	30%	74,307,299	-4%	10%
Mobile payments	486,797,082	0%	87%	38,919,964	-2%	78%
Direct Debit	2,343,478,403	-5%	7%	27,671,722	-3%	-1%
TOTAL	8,017,336,094	-4%	8%	217,618,584	-4%	10%