Yahoo Finance Higher prices and early Spring sun boost March card spending
UK card spending grew in March as sunnier weather and the lifting of remaining pandemic restrictions boosted sentiment. But the rising cost of living and higher prices are starting to influence consumer behaviour.
Card spending rose 17.7% last month compared to the same time period in 2019, according to figures from Barclaycard.
Spending on essential items grew 18.1% in March, the highest uplift since September 2021. This was largely driven by spend on fuel, which soared 26.1% as prices at the pump continued to climb.
Respondents said the cost of living is causing increasing concern for them, with travel plans and shopping preferences changing in response to rising fuel and food prices.
In response to rising petrol and diesel prices, 41% say they are changing the way they travel. Of these, 54% are walking more often, 38% are cutting back on long car journeys, and 22% are opting to cycle.
There was a 16.9% jump in supermarket spending, higher than the growth recorded in both January (15.5%) and February (16%) this year, likely due to inflation and rising food prices.
Meanwhile, 58% of shoppers are looking for ways to stretch their weekly grocery budget, with 52% of this group cutting back on luxuries, and 48% switching from branded to budget or own-branded goods.
Due to the energy price cap increase on 1 April, 91% said they feel concerned about the negative impact of rising household bills on their household finances, up 2% on February and 5% higher than December.
The cost of living squeeze is also causing 89% to worry about the financial impact of wider international conflicts and sanctions, inflation, and rising energy bills, while 88% are concerned about food prices.
This could explain why optimism about the future of the UK economy has fallen to 27%, its lowest level since January last year, when it stood at 24%.
However, despite this challenging backdrop, Brits’ confidence in their own household finances remains steady at 62%, as does confidence in their ability to spend within their means each month.
Read more: UK retail footfall nears pre-pandemic levels but inflation pressure looms
Many consumers are also buying in bulk to offset increasing prices and amid supply worries, with 35% saying they stocked up on everyday items. Some 13% bulk-bought tinned and dried products, while 11$ stocked up on household supplies, and 10% bought tea & coffee in bulk.
Spending on essentials was also boosted by a demand for convenience and the popularity of local shopping, with food & drink specialist stores up 76.9% compared to three years ago.
Despite the rising cost of living, non-essential spending rose 17.5% compared to the same period in 2019.
Hospitality and leisure saw particularly strong growth, rising 18.3%, boosted by a 41.7% surge in spending at bars, pubs and clubs, as the lifting of restrictions encouraged people to return to beer gardens.
José Carvalho, head of consumer products at Barclaycard, said: "Many sectors saw strong growth in March compared to the same period in 2019, as sunnier weather encouraged Brits to socialise at pubs and bars, book staycations and update their wardrobes for spring and summer.
"However, rising fuel prices and household bills are clearly starting to influence consumer behaviour, with many Brits changing their travel and shopping habits to save money.
"While this may dampen growth in the months ahead, we shouldn’t overlook the expected heatwave later in April, and the fast-approaching Easter holidays, both of which are likely to boost non-essential spending."
