Consumer spending grew 1.8 per cent year-on-year in December, the lowest rate of growth seen since March 2016. With inflation at 2.3 per cent, this equated to a contraction in real terms.
Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, shows that essential spending growth dipped to just 0.6 per cent – the lowest figure recorded since July 2016 – caused by a contraction in supermarket spending of 1.1 per cent.
This figure, however, was boosted by strong growth in pubs and restaurants. Pubs saw an increase of 12.9 per cent whilst restaurants were at 9.1 per cent as Brits continued to make the most of the festive period by relaxing and dining out.
The high street, on the other hand, continued to face challenges despite the festive season. Clothing spending saw its third consecutive month of negative territory, falling by 3.0 per cent, while department store expenditure declined by 6.3 per cent. Spending in this sector remained subdued as shoppers cut back on clothing and balanced out their budgets when it came to Christmas time.
In the face of numerous reports of store closures and the challenges facing well-known high street brands, over half of Brits (52 per cent) say they want to support their local high street. Furthermore, 38 per cent said they are deliberately choosing the high street over online-only retailers, suggesting consumers want the high street to remain an important part of their local community.
Despite Brits’ good intentions to support their local economies, many remain concerned about their spending power. One in two consumers (49 per cent) expect to cut back in January to cover the cost of Christmas, while 48 per cent say they feel less confident about their personal finances in the coming year than they have done for many years.
In terms of the wider picture, one in two (50 per cent) UK adults are concerned that there may be a decline in the UK economy – up from 43 per cent last year.
Many shoppers are anticipating price increases over the next three months, particularly around the cost of fuel (65 per cent), household utilities (66 per cent) and groceries (72 per cent).
Esme Harwood, Director at Barclaycard, said: “Growth in consumer spending dropped to its lowest level since 2016 and represents a decline in real terms. Many Brits were more modest in their approach to Christmas spending compared to 2017, cutting back on the essentials to balance the costs of the festive season.
“Despite a desire to support their local high street, Brits expect to cut back in January and remain cautious amidst ongoing economic uncertainty.”