Consumer card spending in the UK saw a modest increase of 1.0% year-on-year in February, according to the latest Barclays Consumer Spend report. This growth is below January's 1.9% increase and less than the current CPIH inflation rate of 3.9%. The report indicates that consumers are reducing essential outgoings while maintaining discretionary purchases, resulting in improved optimism regarding personal and household finances.
Barclays' data reveals that all four consumer confidence measures improved in February. Household financial confidence reached its highest level since tracking began in 2015, with a rise from 70% in January to 75%. Karen Johnson, Head of Retail at Barclays, noted: "It’s encouraging to see confidence in household finances reaching a record high as consumers are making conscious adjustments to their essential spending."
Despite increased consumer confidence, concerns about rising household bills persist. According to the report, 89% of consumers are worried about higher costs for water, energy, and council tax set for April.
The retail sector experienced slight growth of 0.6%, with electronics sales increasing by 6.7%, possibly due to upgrades from earlier lockdown purchases and new product launches like the iPhone 16E.
Subscription services continued their growth trajectory, with digital content and subscriptions rising by 5.1% in February. Will Hobbs, Head of UK Multi-Asset Wealth at Barclays commented: “The outlook for the UK economy remains better than widely anticipated.”
The study also highlights an emerging focus on healthy habits among consumers as spring approaches, with many planning changes such as growing their own produce or opting for healthier food options.
Overall transaction growth showed varied results across different sectors but maintained a cautious balance between caution and comfort amidst impending bill increases.