Consumer card spending slowed to 7.4% growth in January due to Plan B restrictions and rising living costs, Barclaycard shows

Consumer card spending rose 7.4% in January compared to the same period in 2020 – the smallest uplift since April 2021 – as several sectors were hampered by Plan B restrictions, inflation, and rising energy costs.

While these headwinds are likely to persist over the coming months, their near-term impact may be somewhat mitigated by anticipated uplifts from Valentine’s Day, growing inbound tourism, and Brits spending more on activities and experiences to lift their spirits during the winter months.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 10.4%, the smallest rise in nine months. This can largely be attributed to fuel spend seeing its slowest rate of growth (6.7%) since October 2021, as Plan B Covid restrictions throughout most of January meant Brits travelled less and worked from home instead of commuting.

Despite rising inflation, supermarket spending saw its smallest rise (13.6%) since before the onset of the pandemic. One reason for the slow growth was consumers shifting their spending to food and drink specialist retailers (up 67.3%), such as butchers, bakeries and recipe box services, as Brits chose to shop locally due to the work-from-home guidance and re-started meal kit subscriptions after the Christmas break.

Spending on non-essential items saw noticeably smaller growth in January (6.1%) than in December (11.5%), likely due to the combination of Plan B guidance, and the continued rise in the cost of living. This comes as nearly nine in 10 (89%) Brits say they’re concerned about the impact of rising inflation on their household finances, while three in 10 (30%) say they expect increasing household bills to affect the amount they spend on discretionary purchases.

With more Brits staying at home, face-to-face retail spending (excluding grocery) dropped -8.5%, while spend on clothing (4.9%) and sports and outdoor retailers (14.5 %) recorded a lower level of growth than in December (8.8% and 22.0% respectively).

The travel sector was also impacted by Plan B restrictions, with public transport seeing a steeper decline (-44.4%) than last month (-28.1%) as working from home guidance saw Brits delay their return to the office.

Overall hospitality and leisure spending also slipped into decline (-6.3%) after five consecutive months of growth. Within that, the decline in restaurant spending continued to worsen (-17.5% in January, compared to -14.1% in December). Bars, pubs & clubs (14.9%) also saw a smaller month-on-month uplift (up 21.2%).

However, while hospitality and leisure declined overall, spending remained stable among both 16-24 and 25-34-year-olds (up 0.9% and 0.5% respectively), possibly due to younger consumers feeling less concerned about catching Covid-19, and being more comfortable with socialising.

Despite the ongoing economic headwinds, there are some bright spots on the horizon for retail, hospitality and leisure businesses. For example, a quarter of UK adults (25%) say they are spending more on items and experiences to lift their spirits and stay motivated during the winter months, with 39 % of these Brits planning to eat and drink out more often. Similarly, 31 % feel confident that the vaccine booster rollout will lead them to increase their spending on socialising and shopping in-store.

Valentine’s Day should also give retailers and restaurants a further boost, as almost three in 10 (28%) plan to celebrate the occasion, with this year’s budget set to increase from an average of £63 during lockdown in 2021, to an average of £77 this year. Those celebrating will be looking to spend this increased budget eating out at a restaurant (30%) and buying a gift for their partner, such as chocolates or jewellery (29%).

Meanwhile, the colder weather and Plan B guidance resulted in strong growth in ’insperiences’ (up 50.0%) – this includes categories such as digital content, subscriptions and fast food, as consumers enjoyed nights in with a boxset and a takeaway.

January also saw DIY enthusiasts embark on home improvements as spending gathered momentum (up 22.3%, compared to 21.5% in December). Pharmacy and health & beauty retailers also remained strong (12.8%) as shoppers invested in self-care to beat the January blues.

Jose Carvalho, head of consumer products at Barclaycard, said: “January’s Covid restrictions, combined with the rise in the cost of living, clearly impacted consumer spending levels in January. While restaurants and bars, pubs & clubs were inevitably hampered by the ongoing pandemic, there are signs of brighter times ahead for hospitality as Brits say they’re planning to spend more on eating and drinking out to lift their spirits during the winter months.”

“The lifting of Plan B restrictions should also provide a welcome boost to many sectors, as workers travel back into the office and socialise over post-work drinks, while businesses will likely start to see the benefits of increased inbound tourism on retail sales too.”