Consumer spending increased by 3.4% year-on-year in April, recovering slightly from a slowdown in March (2.0%), as Brits shifted their priorities from the previous month to help give spending on ‘nice-to-haves’ a boost.
Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows that non-essential spending increased by 3.7% year-on-year.
The slight uptick in spending growth matches overall consumer sentiment, which has remained relatively upbeat. According to the bank’s research, 62% of Brits now say they feel confident in their household finances, on a par with the figure seen in March.
The potential for an interest rate rise is still a concern for many, however: over a third (35%) of shoppers say they would have to cut back on what they spend each month should the base rate go up.
Of these, over half would pare back on treats for themselves and others, while four in ten would manage their finances by shopping at discount stores more often. A similar proportion say they would rein-in on nights out, suggesting that even the ‘experience economy’ – which has performed strongly over the past year – is not immune.
Barclaycard managing director, Paul Lockstone, shares: “While spending has recovered slightly from the effects of the ‘Beast from the East’, it’s likely we’ve seen some missing expenditure from March carry over to April as the weather finally allowed shoppers to venture back outside.
“Consumers prioritised spending on the ‘nice-to-haves’ last month, but there’s no indication that they are looking to loosen the purse strings quite yet. Instead, the UK seems to be caught in a holding pattern, with people still budgeting carefully. Looking ahead, uncertainty around interest rates is weighing on the minds of many, with people prepared to cut back on non-essentials in order to cope with a rate rise.”
Throughout the month, entertainment proved a bright spot, rising 7.1%, although failing to match the double-digit growth seen for much of 2017. Despite a mini-heat wave towards the end of the month, mixed weather throughout April – including a cold and rainy Easter weekend – kept pub (7.6%) and restaurant (7.2%) growth fairly modest.
Travel spending also cited its highest growth since June 2015, thanks to a strong performance from airlines.
Essential spending slowed to a 21-month low of 1.8%.