UK consumers cut back on groceries, clothes shopping and eating out last month but streaming and pay TV subscriptions jumped as cash-conscious viewers switched to nights in.
The return of big hit series such as Succession, The Mandalorian and Ted Lasso fuelled a healthy 4.1% increase in spend on digital content and subscriptions in March, the highest year-on-year rise in five months, according to Barclays’ regular snapshot of consumer credit and debit card use.
However, consumers seeking to balance household budgets cut back going out to restaurants, which resulted in monthly spend falling 5.6%, while spend in clothing stores fell 3.4% – the sharpest drop in six months.
Overall consumer card spending – which includes spending in shops but also on travel, hospitality and other services – rose by only 4% in March compared with a year ago, significantly below the current official annual rate of inflation of 10.4%.
Barclays, which processes almost half of UK credit and debit card transactions, said soaring household bills had led to more than half (54%) of consumers cutting back on discretionary spending. That echoes the findings of a report by the accountants KPMG earlier this month that found almost two-thirds of UK consumers had cut back on the amount they spent eating out since the start of the year.
The Barclays report also highlights strategies shoppers are using to cope with food price inflation running at more than 18%, its highest level since August 1977.
Spend on groceries rose 7.1% last month – less than half that rate – with 53% of consumers choosing to cut back on luxuries or one-off treats. More than a third (38%) told Barclays they were advance planning meals to avoid wasting food or using vouchers to reduce grocery bills.
“Brits are still trying their hardest to shave money off their weekly shop, as energy bills continue to rise,” said Esme Harwood, a director at Barclays. “Cutbacks are also impacting restaurants, with a number of cash-strapped consumers even avoiding social plans that involve meals out.”
Businesses holding out for a major boost over the king’s coronation weekend may have their hopes dashed. Only 35% of consumers are planning to spend on activities over the extra bank holiday weekend, with only 8% planning to spend money on drinks out at bars and pubs, according to Barclays.
“Hospitality and leisure businesses will be hoping that the busy bank holiday period provides a boost to counteract consumers’ everyday cost savings,” Harwood said. “While predictions for the coronation weekend are lacklustre, the results from Mother’s Day are more encouraging, demonstrating that Brits are still taking advantage of one-off moments to go out and celebrate.”
New figures from the British Retail Consortium (BRC) chime with that conclusion, showing a 5.1% increase in total sales in March compared with a year earlier – well ahead of the 12-month average of 2.6%. “Mother’s Day brightened up sales for the month,” said Helen Dickinson, the chief executive of the BRC. “Stores were given an extra boost, as last-minute shoppers dashed to their local high streets and shopping centres to purchase jewellery, fragrances and flowers.”
Barclays’ consumer spend figures showed a 3.5% increase for “other specialist retailers”, the strongest performance since April last year, thanks to increased purchases at florists and card shops.
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However, KPMG, which compiled the BRC figures, said the rise in the value of sales was mainly because of high inflation, which is masking a wider consumer trend of weaker sales volumes.
Meanwhile, a report from the accountancy firm BDO suggests that by its measure inflation has dropped to the lowest point for a year.
Its inflation index, which looks at a range of surveys and polls put out by organisations, has dropped by 2.19 points to 110.99. While any score above 95 indicates inflation is still growing, it is nevertheless the lowest score since March last year.
The current official UK inflation figure of 10.4%, based on the consumer prices index, covers February. The Office for National Statistics will release the figure for March on 19 April.
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2023-04-10 23:02:02Z
CBMidmh0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy8yMDIzL2Fwci8xMS91ay1ob3VzZWhvbGRzLXR1cm4tdG8tdHYtc3Vic2NyaXB0aW9ucy1hcy10aGV5LWN1dC1iYWNrLW9uLW5pZ2h0cy1vdXTSAQA
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