Published
October 8, 2024
Consumer spending on payment cards rose again in September after returning to growth in August, but the 1.2% year-on-year increase remained below the CPIH inflation rate of 3.1% so in real terms, spending slipped.
That’s according to the latest Barclays Consumer Spend report that also showed a 1.7% decline in essentials spending, the biggest drop since April 2020. The good news is that discretionary spending rose by a healthier 2.7%. That was still below inflation but at least it came closer.
It was driven, as has been mentioned in reports from other companies, by retailer markdowns that incentivised shoppers. Barclays said that a number of categories enjoyed strong performances, including clothing, health % beauty and department stores.
Clothing actually increased 4.5%, which was the first rise for the category this year and its highest growth since as far back as July 2022. It also jumped 23.6% compared to August. This was likely to have been driven by the back-to-school season as well as the sudden onset of autumnal weather and the attractive discounts available.
Those prioritising new clothes and accessories – which added up to 24% of those surveyed – spent £73 each.
And in a connected survey, Barclays found that 53% of consumers say there are treats and luxuries that they buy even when trying to budget. That possibly helped the beauty category into positive territory. People spending on beauty accounted for 18% of those surveyed and they spent £65 each, helping to drive the category up 8.9% last month. Overall, health & beauty combined have consistently outperformed broader discretionary spending since the beginning of last year.
So what might this all mean for the forthcoming festive season? Barclays said that as Christmas product hits shelves, some 23% of consumers expect the season to be more expensive than last year with the majority still concerned about inflation in essentials.
Some 15% of consumers have started saving money for Christmas and 26% are keeping an eye out for festive offers, while 22% are buying gifts in advance to spread the cost.
Karen Johnson, Head of Retail at Barclays, said: “Retail’s recovery emerged as a bright spot in September, despite there being colder weather and darker evenings on the horizon.
“While shoppers’ remain cost-conscious, it’s clear they’re responsive to retailers’ promotional activity. Discerning shoppers are also finding room for treats and little luxuries within their budget, demonstrating that consumers are prioritising spending on things that bring them joy.
“While many are anticipating a costly Christmas, there are encouraging signs that people feel confident in their ability to manage their household finances and take control of their festive spending.”
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