According to recent data from Barclays, consumer card spending increased by 9.7% YoY in January 2023, higher than in December 2022 (4.4%) and slightly above the 9.2% rise in consumer price inflation. This growth is attributed to several factors, including new year sales, the release of blockbuster films, and a surge in holiday bookings, leading to strong performances across the retail, entertainment, and travel industries.
Spending on essential items such as groceries and fuel increased 8.3% YoY, with supermarket spending rising by 7.5% and food and drink specialist stores seeing a growth of 3.4%. This growth is primarily due to rising food prices and consumers opting to cook more from scratch instead of ordering fast food. The takeaway category saw its lowest growth (9.0%) since May 2022, as one in four Brits (27%) said they were limiting the number of takeaways they order.
Utility bills also saw a significant increase, with spending on energy rising by 44.7% YoY, the highest growth rate since September 2022. This is due to the cold snap in January, which led to more Brits turning on or increasing the temperature of their heating. However, 64% of consumers said they were finding ways to save energy at home, with radiators, lights, and ovens topping the list of appliances being used less often to save money.
Spending on non-essential items such as retail, hospitality, and travel increased 10.4% YoY, the largest increase since May 2022. This growth is largely due to the entertainment sector’s significant rise of 21.3%, the largest increase since June 2022. This can be attributed to the release of blockbuster films and cinemas struggling in 2022 due to the Plan B restrictions. Pubs, bars, and clubs also enjoyed a boost (18.1%), while restaurants saw a noticeable improvement (up 4.7%) compared to December. Clothing and department stores saw a rise of 3.6% and 8.3%, respectively, while pharmacy, health, and beauty retailers saw their largest increase since April 2022 (10.2%).
The travel sector also saw a strong uplift (66.1%) as holidaymakers booked getaways for the year ahead. Travel agents and airlines grew 83.1% and 75.7%, respectively. The domestic travel sector benefited from a rise in staycation bookings, with hotels, resorts, and accommodation seeing faster growth than in December (12.2% compared to 8.2%).
Despite the cost-of-living squeeze, most consumers said they were confident in their household finances and ability to live within their means each month (63% and 70%, respectively), which are the highest levels since July 2022. However, 92% of Brits said they were concerned about rising household bills.
