Consumer card spending in the UK increased by just 0.5 per cent year-on-year in August, according to the latest Barclays Consumer Spend report. This figure is down from 1.4 per cent in July and remains below the most recent CPIH inflation rate of 4.2 per cent. The report notes that while essential spending declined, discretionary spending rose by 2.0 per cent, with sectors such as clothing, furniture, and health & beauty performing well.
The data shows that consumer confidence has improved following a base rate reduction by the Bank of England. Confidence in the strength of the UK economy rose six percentage points month-on-month to 28 per cent in August, while confidence in both the European and global economies reached their highest levels in ten months at 31 per cent and 28 per cent respectively. Confidence in household finances also increased to 73 per cent, up from both July and August last year.
Despite these improvements, concerns about rising food prices persist among consumers. In August, nine out of ten UK consumers reported worries about food price increases—a seven-month high—with similar proportions noticing general price rises this year. Products most frequently cited as having become more expensive include meat, seafood and eggs (52 per cent), fruit and vegetables (49 per cent), and dairy products (48 per cent).
Retail spending overall grew by 0.6 per cent during August, led by a continued strong performance from health and beauty stores, which saw a rise of 15.6 per cent—marking over four years of consecutive growth for this category. Furniture store sales were up by 11.6 per cent, their largest increase since March 2022, while clothing stores experienced a boost of 2.5 percent.
In hospitality and leisure, digital content & subscriptions grew by 5.6 per cent amid successes such as Netflix’s animated film KPop Demon Hunters; entertainment spending was also up by 5.3 percent compared to last year.
Travel remained one of the strongest non-essential categories post-pandemic with a growth rate of 3.1 percent for August; however, over half of surveyed consumers said they plan to travel off-peak next year to save money—a trend especially pronounced among Gen Z respondents.
The use of artificial intelligence tools for personal finance management is becoming more common: one third (34 percent) of UK consumers are now using AI for budgeting or planning purposes; among them, many are leveraging these tools for holiday planning tasks such as itinerary creation or finding deals.
Karen Johnson, Head of Retail at Barclays, stated: “Encouragingly, confidence in household finances remained steady in August, suggesting that while the cost of living is still front of mind, consumers are learning to navigate the challenges and make the most of their budgets.
“It’s clear that the ‘lipstick effect’ is having an impact outside of beauty, with shoppers treating themselves to feel-good purchases for themselves and their homes. Similarly entertainment and travel continue to benefit from consumers’ appetite for fun and memorable experiences, with KPop Demon Hunters emerging as a big winner this summer.”
Jack Meaning, Chief UK Economist at Barclays added: “It is great to see consumer confidence improve in August, and households feel the benefit of another Bank of England rate cut. However, the outlook for the rest of the year remains subdued, particularly as Budget speculation is likely to add to uncertainty for both households and businesses. In our view, it will take further interest rate cuts to provide the economy with a sustained boost.”
Barclays reports that it sees nearly forty percent of all credit and debit card transactions across its issuing and acquiring businesses in Britain—providing unique insight into national consumer spending patterns.
The research behind these findings was conducted between August 22nd–25th through Opinium Research on behalf of Barclays using responses from two thousand individuals representative across age groups gender regions income brackets.