Consumer card spending edges up in January but clothing spend dips

Consumer card spending grew 3.1% year-on-year in January 2024, higher than the growth of 2.3% in December 2023, but lower than the latest CPIH inflation rate of 4.2%, with clothing spend seeing a 0.6% decline despite the lure of the sales.

Despite the dip in clothing spend, it was an improvement compared to December 2023, which saw a decrease of 2%. That’s according to the latest data from Barclays, which sees nearly half of the nation’s credit and debit card transactions.

Overall spending on non-essential items increased 2.6% in January – consistent with the growth seen in December and November last year, at 2.5% and 2.7% respectively.

However, as the latest consumer confidence survey carried out by Opinium Research on behalf of Barclays has revealed, that comes as over two fifths (43%) of consumers say they are planning to cut down on discretionary spending due to rising household bills, with many tightening their belts after the festive season.

The cold weather in January, as well as storms Isha and Jocelyn, meant many shoppers chose to browse the January sales online instead of hitting the high street.

Karen Johnson, Head of Retail at Barclays, said: "After a December filled with festive indulgence, Brits took on a more frugal approach in January, choosing to stay at home more often to save money and shelter from the winter weather.

"This meant that online retail performed strongly, as shoppers browsed the sales from the comfort of their sofas, while demand for digital content and takeaways remained robust, boosted by the release of popular new TV releases such as ‘The Traitors’ and ‘Fool Me Once’.

"While this shift in behaviour resulted in subdued growth for hospitality and leisure, it’s encouraging that confidence is improving, with consumers remaining resilient and finding savvy ways to manage their finances."

While rising household bills remain a concern for the majority (88%), the nation is feeling more optimistic overall, with consumers’ confidence in both their household finances and ability to live within their means reaching its highest point since November 2021 (70% and 74% respectively).

Jack Meaning, Chief UK Economist at Barclays, added: "Increasing consumer confidence is a positive message for the UK outlook in 2024, as we see inflation continue to fall, real incomes rising and growing signs that interest rate cuts are coming.

"Spending looks to be on an upward trajectory, set to increase more than inflation in the coming months, which will be an important milestone for consumers and businesses who were squeezed throughout 2023."

The consumer confidence research was carried out between 19-23 January 2024. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, and income group.