At a time when rising council tax, broadband and mobile phone prices, as well as pressures on family finances, have put a strain on customer spending growth, a report suggests it is at its lowest level for more than three years.
Despite customer confidence rising due to falling inflation, spending has not increased, according to Barclays’ monthly snapshot of credit and debit card activity.
The financial institution said card spending in May was up just 1% on the same month last year, due to April’s higher requirement rate combined with another month of appalling weather.
Households Reducing Spending on Takeaway Gifts Due to Rising Bills and Inflation
In an attempt to save money, families cut back on takeaway orders in May, leading to the lowest rate of increase in spending since February 2021, as Covid’s blocking regulations took their toll on the economy.
A survey of 2,000 customers by Barclays found that 87% of respondents were worried about the impact rising household costs could have on their private budgets. Concerns included increases in Council Tax, mobile phone and broadband services, water bills and dental treatment.
Nevertheless, April saw an average 5% rise in Council Tax payments, as well as an 8% rise in mobile phone, smartphone and broadband contracts.
Despite this, Barclays believes that falling inflation, which fell to 2.3% in October 2022 from a 41-year high of 11.1%, should extend the wait.
When the climate improves, almost one in three consumers (28%) intend to increase their spending. Karen Johnson, Head of Retail at Barclays, spoke of the difficult retail situation in May, but was optimistic that the climate would improve in the future and with major events such as Wimbledon and the Euro.
In addition, a special survey conducted by KPMG and the British Retail Consortium highlighted the impact of the weather on consumer behaviour.
Overall Growth Figures
| Spend Growth | Transaction Growth | |
| Essential | 1.6% | 2.0% |
| Non Essential | 0.7% | 1.5% |
| OVERALL | 1.0% | 1.7% |
| Retail | -0.4% | 1.7% |
| Clothing | -1.0% | 2.6% |
| Grocery | 0.3% | 2.4% |
| Supermarkets | 0.3% | 2.0% |
| Food & Drink Specialist | 0.6% | 4.3% |
| Household | -3.6% | 1.8% |
| Home Improvements & DIY | -5.4% | -1.3% |
| Electronics | -1.2% | 6.1% |
| Furniture Stores | -2.3% | 3.5% |
| Â Garden Centres | -3.3% | -1.8% |
| General Retailers | 1.5% | 1.0% |
| General Retailers & Catalogues | 4.1% | 4.4% |
| Department Stores | -1.8% | 0.7% |
| Discount Stores | -8.4% | -10.6% |
| Specialist Retailers | -0.9% | -1.4% |
| Pharmacy, Health & Beauty | 5.0% | 1.6% |
| Sports & Outdoor | -6.0% | -6.1% |
| Other Specialist Retailers | -3.3% | -3.7% |
| Hospitality & Leisure | 2.7% | 1.6% |
| Digital Content & Subscription | 7.8% | 4.5% |
| Eating & Drinking | 0.6% | -0.7% |
| Restaurants | -15.7% | -16.6% |
| Bars, Pubs & Clubs | 2.9% | 1.4% |
| Takeaways and Fast Food | -0.2% | -1.5% |
| Other Food & Drink | 3.6% | 0.6% |
| Entertainment | 3.0% | 0.8% |
| Hotels, Resorts & Accommodation | -0.5% | -3.0% |
| Travel | 4.7% | 6.6% |
| Travel Agents | 4.3% | 11.5% |
| Airlines | 5.6% | 5.4% |
| Public Transport | 0.2% | 2.7% |
| Other Travel | 9.2% | 15.2% |
| Other | 2.1% | 2.2% |
| Fuel | -1.9% | -1.6% |
| Motoring | -1.4% | 7.9% |
| Other Services | 6.2% | 3.5% |
| Insperiences | 2.2% | 0.9% |
| Online | 2.3% | 3.9% |
| Face-to-Face | -0.1% | 0.9% |
Retailers Pin Hopes on Sports Events
In contrast to the 4% annual fall recorded in April, the report shows that in-store and online retail spending rose by 0.7% year-on-year. Retailers are counting on major sporting events, such as the Euro’s and the Olympics, to boost sales after a disappointing spring.
BRC chief executive Helen Dickinson said: ‘Retail sales were up only slightly, even though retailers enjoyed a fantastic bank holiday weekend last month, due to the lack of improvement in the weather for most of May.
“Despite a decline in non-food sales throughout the month, the long weekend saw a spike in the sale of gardening and do-it-yourself supplies, as well as robust apparel sales. Sales of computers increased to their highest points since the pandemic, and many customers continued to update their purchases of technology during that time.” Helen Dickinson.
Meanwhile, May saw a resumption of growth in the manufacturing industry, according to the monthly survey of the sector by the Procurement and Supply Chartered Institute (CIPS) and S&P. Output rose at its fastest rate for more than two years, and business optimism increased.
