Consumer spending growth slowed as temperatures fell in March, rising just 2% year-on-year – the lowest level since April 2016 – as the poor conditions brought by the ‘Beast from the East’ took their toll on the high street.
Data from Barclaycard shows that in-store spending fared particularly poorly, contracting 1.9% as a third of consumers reported the cold weather prompted them to spend less overall on the high street. Expenditure online grew by 11%, however, as Brits chose to shop from the comfort of their own homes in the face of inclement weather.
Shoppers continued to prioritise the essentials, which rose 3.8%, while spending on the ‘nice-to-haves’ increased by just 1.1%.
Bright spots in non-essential spending were restaurants and pubs, up 7.2% and 7.7% respectively. This was, however, a dip in growth compared to February. Garden centres saw the biggest fall, contracting by a record 26.4% as the ‘Beast from the East’ dashed any hopes of early planting.
Despite the slowdown in March, overall expenditure for the quarter was broadly stable with growth of 3.1 per cent in Q1, down only slightly from 3.2 per cent in Q4 2017 and matching the figure for Q3 2017.
Signs of stability also extended to consumer sentiment; 64% of Brits are currently confident in their household finances, up 10 percentage points from the month prior and the best reading since October 2017. Likewise, the proportion of those confident in the UK economy rose from 34%in February to 37 per cent last month, a seven-month high.
While these figures suggest reasons to be optimistic, however, it’s important to note that a meaningful minority of consumers feel worse off now than they did last year. Compared to 2017, a third say they are less confident in their ability to save money for a rainy day, and a quarter say the same about covering the cost of a night out.
Paul Lockstone, Managing Director at Barclaycard, comments: “It seems consumers have become accustomed to adjusting their budget and as a result, are more confident in their own finances. While there are bright spots, however, it’s important to note that a sense of caution still remains, with many of us hesitant to change our spending patterns no matter what the next few months may bring.”
All in all, a sense of caution still remains; 44% of consumers indicate that they have adapted their spending to cope with rising prices and one in five are shopping at discount stores more often. The trend looks likely to continue – although the prevailing rate of inflation slowed slightly last month, nearly half of consumers say they do not plan to change their spending habits any time soon.