Cost of living crisis begins to hamper consumer spending

Spending on essential items dropped to 18.1% in April, compared to 17.4% in March, as inflation and rising living costs are starting to impact the retail sector.

Research from Barclaycard found this was largely due to spending on fuel falling from a record 26.1% increase last month to 23% in April.

However, consumer card spending overall grew 18.1% in April compared to the same period in 2019, marking the highest uplift since October 2021.

Shopping at supermarkets and food and drink specialist stores grew 15.9% and 76% respectively, compared to the same period three years ago. These were slightly smaller uplifts than in March (16.9% and 76.9%), as Brits seek to save money on weekly shops due to increasing prices.

Over half (52%) of these shoppers are cutting down on luxuries, and just under one in two (47%) are buying budget or own brand goods over branded goods, while almost two fifths (38%) are using vouchers or loyalty points to obtain discounts.

Meanwhile, the proportion of Brits feeling concerned about the impact of higher household bills on their finances remained high at 90%. As cost increases continue to hamper consumer confidence, optimism about the future of the UK economy fell from 27% in March to 25% in April.

However, spending on non-essential items grew 18.4% compared to the same period in 2019, representing a small uplift from last month’s 17.5%. All in all, shoppers’ confidence in their ability to spend on non-essential items currently remains steady at 52%.

Clothing saw a 12.6% uplift, higher than last month’s 10.1%, department stores returned to growth at 1.3% after seven months of decline, and pharmacy, health, and beauty stores also saw an improvement of 20.2% from 18.8% last month.

Almost a fifth (17%) of Brits are also spending more on special occasions, such as weddings and hen/stag dos, and holidays this summer, to make up for lost time over the last two years. Some of the most popular purchases are new clothes and accessories at 27%, and beauty products, such as fake tan and make-up, at 13%.

José Carvalho, head of consumer products at Barclaycard, said: “The impact of rising living costs on consumer spending is starting to show.

“While concerns around rising household bills may continue to hamper spending on non-essential items, the upcoming Platinum Jubilee Weekend and summer months should provide opportunities for Brits to spend on celebrations and make the most of warmer weather.”

source https://www.jewelleryfocus.co.uk/205035-cost-of-living-crisis-begins-to-hamper-consumer-spending