Record 73% of households try to cut cost of weekly shop

New analysis by Barclays found that grocery spending saw its smallest increase since June 2022, with a record 73% of consumers trying to cut the cost of their weekly shop.

The analysis showed that consumer card spending slowed to 1.6 per cent growth in April, down from 1.9 per cent in both March and February, and below the latest CPIH inflation rate of 3.8 per cent.

While consumer confidence in household finances rose to its highest level in over three years, a slowdown in food price inflation and cutbacks on food and drink led to a decline for restaurants and the smallest uplift in supermarket spending since June 2022. Meanwhile, cold and wet weather dampened retail sales, but Easter and summer holiday bookings boosted pubs, entertainment and international travel. 

Consumers cut back on spending on eating and drinking out in April, with restaurants once again experiencing a downturn, falling further into decline at -13 .1 per cent (in comparison to -12.6 per cent last month). Meanwhile, growth in spending on takeaways and fast food remained flat, at 3.0 per cent.

This comes as half (49 per cent) of consumers say they are concerned about how much they spend on food and drink, with the same proportion making the effort to cut back on discretionary spending (49 per cent). Of this group, the majority are spending less on dining out and ordering takeaways, both at 54 per cent respectively. One in four (24 per cent) say they are cutting back on coffee or drink subscriptions.

To control spending, 58 per cent of consumers have openly discussed aspects of their finances with loved ones – otherwise known as ‘loud budgeting’ – with consumers most often talking about their goal to cut back on takeaways (29 per cent) and restaurants (25 per cent).

Despite falling food price inflation (down from 5.0 per cent to 4.0 per cent), a record 73 per cent of consumers are actively looking for ways to reduce the cost of their weekly shop – the highest percentage since Barclays started tracking in January 2023 – as grocery spending growth reached its lowest level (1.0 per cent) since June 2022 (-0.8 per cent). More broadly, spending on essential items grew just 1.7 per cent year-on-year in April, the lowest rise so far this year.

Two in five (44 per cent) supermarket savers are avoiding impulse buys at the checkout, while 37 per cent are stockpiling their go-to products when they are on offer, and three in 10 (29 per cent) are batch cooking to save money. Meanwhile, more shoppers have noticed supermarket products running out of stock, at 60 per cent (vs. 50 per cent last month), with fruit and vegetables, and eggs and dairy emerging as the most cited items impacted.

Despite the overall slowdown in spending growth, consumer’s confidence in their ability to manage their household finances reached its highest level since November 2021, at 71 per cent. Consumers’ confidence in their ability to live within their means also improved, increasing by two percentage points month-on-month to 74 per cent. Confidence in their ability to spend more on non-essential items reached 56 per cent, up from 55 per cent in March.

Overall retail spending contracted by -0.1 per cent, marking the first month of decline for the category since September 2022, as in-store shopping was hampered by April’s cold snap. Face-to-face retail (excluding groceries) fell by -2.5 per cent, and clothing sales dropped by -2.1 per cent. However, pharmacy, health & beauty retailers bucked this trend, seeing a 4.9 per cent increase, boosted by a number of macro factors, such as the “lipstick effect”, the wellness boom and viral makeup and skincare videos.

Karen Johnson, Head of Retail at Barclays, said “Retailers were hopeful that discretionary spending would bounce back by mid-year, buoyed by falling inflation and the prospect of better weather. While improving consumer confidence offers a ray of hope for the retail and hospitality industries as the summer season approaches, many retailers have adjusted their expectations, anticipating no real recovery until the autumn.”

Mark Arnold, Head of Savings and Mortgages at Barclays, said: “Consumers and lenders alike are anticipating a drop in interest rates this year, but optimism is understandably tentative as the market is still feeling the effects of last year’s volatility. Our data shows that Brits are still facing higher rent and mortgage payments, although costs are still slowing down over the longer term.”

Jack Meaning, Chief UK Economist at Barclays, said: “With inflation expected to have dropped back to 2 per cent in April, and with many anticipating a boost from the National Living Wage increase, it is encouraging to see consumer confidence picking up. Given the long squeeze consumers have faced, it may take time for this to translate into stronger discretionary expenditure, but easing interest rates in the second half of this year should spur consumers’ confidence and spending.”