UK consumer spending rises despite inflation fears, Barclays reports
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UK consumer card spending saw a 4.2% year-on-year increase in September, according to a report by Barclays published on Tuesday. This is a notable improvement from August’s growth of 2.8%, though it still falls short of the 6.3% Consumer Price Index including owner occupiers’ housing costs (CPIH) inflation rate.
The rise in spending was largely driven by a 4.6% increase in expenditure on essential items, spurred by a surge in fuel spend (-10.9%) and a 7% rise in grocery spending, compared to August’s growth of 4.5%. This uptick in essential goods spending comes amidst increasing fuel and grocery prices, as noted by Barclays.
The Rugby World Cup and late summer sun also played a role in boosting pub and bar expenditures, while restaurant and takeaway spending dipped as UK residents saved for holidays.
However, the rising cost of living and monetary tightening from the Bank of England have prompted 44% of Brits to plan reductions in discretionary spending. In response to «surge pricing» and «shrinkflation», consumers are increasingly opting for budget goods (49%) and multibuy deals (52%). Despite these cost-saving measures—which also include utilising vouchers or loyalty points (47%) and exploring multiple supermarkets for deals (41%)—67% of consumers believe supermarkets inflate regular prices to make promotional schemes seem more enticing.
In response to these consumer sentiments, supermarkets have begun reducing prices on fruits, vegetables, bread, and tinned food. Yet, doubts about the value of supermarket loyalty schemes persist.
