Consumer spending growth is at its weakest in more than three years as higher council tax bills and the rising cost of broadband and mobile phones eat into household budgets, a report has said.
The monthly snapshot of credit and debit card activity from Barclays found an improvement in consumer confidence as a result of falling inflation was not leading to a pickup in spending.
The bank said April’s increases in the cost of essential items, coupled with another month of poor weather, meant card spending was just 1% higher in May than in the same month a year earlier.
With households cutting back on takeaways as a means of saving money, May recorded the lowest spending growth since February 2021, when the economy was affected by Covid lockdown restrictions.
A survey of 2,000 consumers conducted for Barclays showed 87% were concerned about the impact of rising household bills on their personal finances, with increasing council tax, broadband and mobile costs, water bills, and dental costs among the issues raised.
Council tax bills rose by 5% on average in April, while broadband and mobile phone contracts increased by about 8%.
Barclays said the fall in inflation – which hit 2.3% in April, down from a then 41-year high of 11.1% in October 2022 – would eventually boost activity. The survey found almost one in three consumers (28%) said they would spend more when the weather improved.
Karen Johnson, the head of retail at Barclays, said: “Retailers faced a challenging May, yet the few sunnier days in the month did bring a welcome uptick in footfall. As consumers gear up to spend more with better weather, and with the Euros, Wimbledon, and Taylor Swift’s Eras tour on the horizon, there’s a brighter outlook for the coming months.”
A separate survey from the British Retail Consortium and KPMG also highlighted the effect of the weather on consumer behaviour.
The report showed retail spending in stores and online was 0.7% up on a year earlier, an improvement on April’s 4% annual decrease. Retailers are banking on sporting events such as the Olympics and the Euros to boost takings after a weak spring.
Helen Dickinson, the BRC’s chief executive, said: “Despite a strong bank holiday weekend for retailers, minimal improvement to weather across most of May meant only a modest rebound in retail sales last month.
“Although non-food sales fell over the course of the month, the long weekend did see increased purchases of DIY and gardening equipment, as well as strong clothing sales. Growth in computing sales reached their highest levels since the pandemic, with many consumers continuing to upgrade tech bought during that period.”
Meanwhile, the monthly survey of industry from the Chartered Institute of Procurement and Supply (CIPS) and S&P showed a return to growth for manufacturing in May, with output rising at its fastest pace in more than two years and business optimism improving.
The CIPS/S&P purchasing managers’ index rose from 49.1 in April to 51.2 in May. A reading above 50 indicates that the sector is expanding.
https://news.google.com/rss/articles/CBMibmh0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy9hcnRpY2xlLzIwMjQvanVuLzA0L2ZhbGxpbmctdWstaW5mbGF0aW9uLW5vdC1sZWFkaW5nLXJpc2Utc3BlbmRpbmctcmVwb3J00gFuaHR0cHM6Ly9hbXAudGhlZ3VhcmRpYW4uY29tL2J1c2luZXNzL2FydGljbGUvMjAyNC9qdW4vMDQvZmFsbGluZy11ay1pbmZsYXRpb24tbm90LWxlYWRpbmctcmlzZS1zcGVuZGluZy1yZXBvcnQ?oc=5
2024-06-04 04:00:00Z
CBMibmh0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy9hcnRpY2xlLzIwMjQvanVuLzA0L2ZhbGxpbmctdWstaW5mbGF0aW9uLW5vdC1sZWFkaW5nLXJpc2Utc3BlbmRpbmctcmVwb3J00gFuaHR0cHM6Ly9hbXAudGhlZ3VhcmRpYW4uY29tL2J1c2luZXNzL2FydGljbGUvMjAyNC9qdW4vMDQvZmFsbGluZy11ay1pbmZsYXRpb24tbm90LWxlYWRpbmctcmlzZS1zcGVuZGluZy1yZXBvcnQ
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