Consumer spending grew 9.7% in January boosted by new year sales
Consumer card spending grew 9.7% year-on-year in January 2023 – higher than in December (4.4%) and slightly above the 9.2% rise in consumer price inflation.
New year sales, blockbuster film releases and a surge in holiday bookings led to strong performances across retail, entertainment, and travel.
Growth at clothing and department stores rose 3.6% and 8.3% respectively, compared to 1.5% and 2.8% in December 2022.
However, comparable growth rates were inflated by the Omicron Plan B restrictions in January 2022, which caused a drop in non-essential spending at the time, according to the latest consumer spending report from Barclays, which sees nearly half of the nation’s credit and debit card transactions.
Barclays says that, aside from the impact of Plan B restrictions, the growth can also be attributed to the transport strikes in December which caused many Christmas party bookings to be rescheduled for January.
Other figures from the report revealed:
- Spending on utilities grew 44.7% – the highest rate of growth since Barclays began tracking this data in April 2022
- Supermarkets saw slightly higher growth than in December, primarily due to rising food prices, as well as consumers cooking more from scratch instead of ordering fast food
- Consumer confidence in household finances reached its highest level since July 2022, at 63%, as more Brits feel able to live within their means each month
- The percentage of Brits who say they are concerned about rising household bills is unchanged at 92%
- The travel sector saw a strong uplift (66.1%) as holidaymakers booked getaways for the year ahead
Esme Harwood, Director at Barclays, said: “January saw a number of categories bounce back from last year’s Plan B restrictions thanks to Brits booking holidays, taking trips to the cinema, and snapping up bargains in the sales.
“However, while it’s encouraging that confidence in household finances saw a slight boost, it is clear that Brits will still need to find ways to manage their budgets over the coming months amid rising grocery price inflation and mounting utility bills.”
Silvia Ardagna, Head of European Economics Research at Barclays, commented: “The recent rise in UK card spending is due in large part to inflation, base effects from last year’s Plan B restrictions, and probably some statistical effects resulting from the strikes.
“Looking ahead, we think that the UK economy is likely to contract in Q1, as demand drops in real terms due to the loss in household purchasing power, as well as rising energy and mortgage bills. However, the silver lining is that the labour market remains tight, with low unemployment and elevated wage growth.”
Since January 2023, the report has been renamed The Barclays Consumer Spending Index, however the methodology and data sources remain unchanged.