Hot weather boosted card spending in July: Barclaycard

Increased spending on fuel and supermarket shopping rose 7.0 percent year-on-year, greater than the 4.0 percent rise recorded in June, reveals the latest data. 

Consumer card spending grew 7.7 percent in July compared to the same period in 2021, and 1.6 percent compared to June 2022, as Brits spent more on clothing, beauty and staycations as the summer holiday period began. However, consumers are starting to cut back on overseas travel and eating and drinking out, as disposable income falls and wage growth is outpaced by inflation. 

The increase in essential spending was driven largely by fuel and supermarket shopping, both of which saw year-on-year growth (29.9 percent and 2.1 percent respectively), as the prices of petrol, diesel and everyday items continued to climb. Meanwhile, average spending on utility bills rose 43.9 percent year-on-year, even higher than last month’s growth of 39.6 percent. 

At the supermarket, almost nine in 10 (89 percent) Brits report seeing increases in the prices of everyday items, with the majority noticing that butter (53 percent), milk (51 percent) and meat (47 percent) are more expensive than they were in June. 

This comes as 45 percent of shoppers say they are looking for ways to get more value from, or to reduce the cost of their weekly shop. Over half (52 percent) of this group are paying closer attention to the prices of items they buy regularly, and the same proportion (52 percent) are cutting down on luxuries or one-off treats for themselves. 

General retailers were another bright spot, recording rises of 5.5 percent month-on-month and 0.5% year-on-year, with a portion of that growth directly attributed to Amazon’s recent Prime Day. Meanwhile, discount stores grew 3.1 percent and 3.3 percent over the same period, as more Brits looked for ways to balance their budgets. 

In addition, nearly two fifths (37 percent) are purchasing certain items on a need-to-buy basis to save money and avoid waste, resulting in an emerging trend for smaller basket sizes, and more frequent trips to the supermarket to restock when items run out. The average value of a supermarket transaction has dropped from £23.67 in January 2021 to £19.33 in July 2022, while the average number of monthly supermarket purchases per person increased from 8.70 to 11.91 over the same period.  

However, demand has also been falling due to the cost-of-living squeeze; almost three in 10 (29 percent) Brits say they plan to spend less on social plans and days out this summer, with 67 percent of this group cutting back on eating out at restaurants, and 55 percent spending less at pubs, bars and nightclubs. 

Meanwhile, the data also shows nine in 10 (91 percent) are concerned about rising inflation, surging household bills and higher food prices, while confidence in the future of the UK economy remains low at 26 percent. 

José Carvalho, head of consumer products at Barclaycard, said, “July saw Brits get into the swing of summer by prioritising non-essential spending on staycations, new clothes and beauty products, while the heatwave gave an extra boost to the electronics sector, as consumers bought gadgets to keep cool. 

“However, inflation continues to have a noticeable impact, with price rises forcing shoppers to spend more on essential everyday items such as fuel, butter and milk, and to cut back on some discretionary experiences such as meals and drinks out, and holidays abroad.” 

“We know that this is a really challenging time for many consumers, so it is reassuring to see that more Brits are feeling confident about their household finances and ability to live within their means each month. This shows that, faced with difficult circumstances, many are finding ways to budget and manage their finances successfully, to cope with ongoing inflationary pressures.”