Spending growth stabilises at 3% as consumers cut back on non-essentials

Credit and debit card spending

Consumer spending in the UK remained steady in September with a recorded growth of 3% – in line with the Q3 average of 3.1%.

Brits are balancing budgets to help address the subdued wage growth and to shore up their finances in anticipation of potential interest rate hikes.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essentials (3.8%) outstripped discretionary spend growth (2.8%) last month. This sees a return of a trend seen over the second quarter of 2017.

Expenditure on ‘must-haves’ was driven by increased spending at the pump (5.4%) and in the supermarket (3.7%), as higher prices on petrol and everyday groceries helped push inflation to its joint-highest rate in more than five years (2.9%).

Shoppers reined in their spending on entertainment (8.2 %), reflected in slower growth in restaurants (11.4%) and pubs (7.7%) – down from 12.4% and 9% respectively in August.

Last month’s figure was the smallest increase in pub expenditure since March 2015, suggesting the arrival of unpredictable, autumnal weather may have kept Brits away from beer gardens.

The absence of any major ticket releases or blockbusters in September saw spending on cinemas and event tickets fall 5% to enter negative territory for only the second time this year.

The drop in entertainment contrasted with increased spend on clothing (4.5%), which continued its recovery from a contraction of 0.3% in July and subsequent 3% growth in August.

Balancing the books remains a top priority for Brits as they continue to make minor adjustments in spending to offset rising prices and stagnating wage growth. 62% now feel they get less for their money compared with three months ago – the highest figure since Barclaycard first started asking this question in 2014.

Paul Lockstone, Managing Director at Barclaycard, said: “Household expenditure was largely flat in September after accounting for the effect of inflation. Rising prices are undoubtedly having an impact on shoppers’ spending priorities, with more of the budget devoted to everyday essentials.

“As a result, consumers are having to work increasingly hard to stretch their monthly budget and the ‘nice to haves’, such as time at the pub and eating out, have clearly taken a knock.”