Consumer spending grew 5.5% in April as inflation drives up cost of everyday essentials, Barclaycard reports


Consumer spending rose 5.5% year-on-year in April driven by inflation on essentials and a later Easter in 2017

Essential item expenditure grew 11.4%, partially due to an ‘Easter bounce’ in supermarket spending (10.3%) and another strong month for petrol (14.7%)

Although meals out during the bank holiday led to rises in pubs (20.4%) and restaurants (16.5%), non-essential spending overall only increased by 3.7%.

The proportion of consumers feeling confident in their household finances dipped 14 percentage points to 56% from 70% in March – with two-thirds of Brits saying they are focusing more on getting value for money on purchases.

Consumers spent 5.5% more year-on-year in April as a late Easter and inflation drove noticeable uplifts across a number of categories. Shoppers also continued to spend on the ‘experience economy’ – prioritising time with friends and family despite the higher cost of day-to-day necessities.

Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows high levels of growth across everyday essentials with Brits spending more on groceries in particular, pushing supermarket growth to 10.3%. This double digit rise, however, was underpinned by the later timing of Easter relative to 2016 and by inflation, which rose to a 42-month high of 2.3% in March.

The buoyant growth in the supermarket sector, and another strong month for petrol, which remained high at 14.7%, meant that spending on essential items soared to 11.4% – comfortably the highest level seen since Barclaycard began compiling data in 2012.

Barclaycard also saw a concurrent rise in discount store spending (16.6%), indicating more shoppers are looking for bargains, potentially in a bid to save some cash in the household budget where possible as the cost of everyday goods increased.

Despite this, and perhaps because of the extra days off work, shoppers were still willing to loosen the purse strings when it came to spending on ’the experience economy’. While growth in discretionary categories slowed overall, up 3.7% in comparison to March’s 4.8%, entertainment remained a bright spot (up 15%) as Brits took advantage of the bank holiday weekend to dine out with friends and family in pubs (up 20.4%) and restaurants (up 16.5%).

DIY stores and garden centres also performed strongly, rising 26.6% and 7.7% respectively, as shoppers took advantage of the ‘mini-heatwave’ early on in the month to spruce up their homes and gardens.

Research undertaken for Barclaycard amongst consumers found that this ‘business as usual’ approach to spending is likely to continue in many categories; four in 10 (40%) say that the value of the pound will not affect their summer holiday plans, and one in five (21%) plan to spend more on experiences over physical things in May.

There is evidence, however, of a broader fall in perceived spending power as a result of inflationary pressures, with just over half (56%) of Brits indicating they feel confident in their household finances – down from 70% who said the same in March. Many are looking to adjust their spending to counteract the rising prices of everyday goods, with two-thirds of Brits (67%) saying they have become much more careful to seek out value for money in the purchases they make, the second-highest figure in the past 12 months.

Paul Lockstone, managing director at Barclaycard, said: “A late Easter and rising prices provided a superficial boost to spending in April, but behind the headline figure it’s clear consumers are recognising and responding to the inflationary pressures being placed on household budgets. Despite growth across a number of categories, the spending picture in real terms is one of growing caution, as seen by declining confidence levels amongst the UK’s consumers.

“The relatively dry and warm weather was a natural benefit to pubs, restaurants and garden centres, giving consumers the opportunity to treat themselves where they felt comfortable doing so. With a renewed focus on value for money it is likely that consumers will need to make necessary adjustments to their monthly budgets in a bid to balance essential and discretionary spending.”