Consumer card spending grew in September as late summer sun boosted in-store sales

Consumer card spending grew 4.2% year-on-year in September as the late burst of summer sun gave in-store spending a boost, according to the latest report from Barclays.

This was less than the latest CPIH inflation rate of 6.3%, but higher than August’s year-on-year growth figure of 2.8%.

Spending on non-essential items increased 4%, slightly more than the 3.7% in August, as the warmer weather in early September encouraged Brits to visit the high-street and socialise with friends and family.

Clothing stores saw a slight improvement of -0.2% in September, compared to -0.7% in August, as shoppers browsed for seasonal fashion items.

Discount stores were a bright spot in September, returning to 1.5% growth following a decline of 0.2% in August.

Pharmacy, health and beauty stores enjoyed a 6.9% boost in September – the highest since January 2023 – possibly thanks to the "lipstick effect", where consumers prioritise small indulgences, such as cosmetics and self-care products, over big-ticket items during periods of economic uncertainty.

Bars, pubs and clubs also had a positive month, rising 6.1% compared to 2.8% in August, most likely due to sports fans flocking to watch major sports events such as the Rugby World Cup.

Travel, which has been one of the best performing categories in 2023, continued its double-digit growth in September to 13.2%, with much of that uplift driven by demand for holidays abroad.

Meanwhile, the rising cost-of-living continues to impact spending on restaurants, which saw further decline in September of 10.8%. This comes as 44% of Brits said they are planning to reduce their discretionary spending over the next couple of months to save money for the festive period, with eating out at restaurants the most frequently cited cutback.

A major reason for autumn savings is that 40% of Brits say they expect the coming Christmas period will be more expensive than last year.

To help spread the cost, 20% of Brits have already started to buy presents, while 18% have spoken to loved ones "to make a mutual agreement to cut back on gift-giving".

Jack Meaning, Chief UK Economist at Barclays, said: "Over the last few months, a picture has been building of consumers beginning to pull back on discretionary spending as the cost-of-living and monetary tightening from the Bank of England increasingly bite. We’ve seen the warning signs from surveys, and now we see it in the more concrete spending data.

"This suggests the outlook for consumers, and the businesses that rely on them, is weak, even as they finally see their disposable incomes rise faster than inflation. It makes it hard to see anything but a relatively stagnant economy on the horizon."

Barclays sees nearly half of the nation’s credit and debit card transactions, providing insight into UK consumer spending.

The accompanying consumer confidence survey in the report was carried out between 22-26 September 2023 by Opinium Research on behalf of Barclays. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, and income group.