Consumer Spending Growth Fueled by Travel and Entertainment in April

In April, consumer spending in the UK experienced a modest growth of 4.3%, as travel and entertainment sectors contributed to the increase, according to a Barclays report. The demand for holidays and leisure activities drove growth in airlines and sports & outdoor retailers, while Eurovision ticket sales and Easter half-term activities boosted the entertainment sector.

Grocery spending remains below inflation, as consumers switch to lower-priced products and seek discounted “yellow sticker” items. In contrast, entertainment saw a significant uplift, fueled by Eurovision ticket sales and families engaging in Easter half-term activities.

Airlines and sports & outdoor retailers benefited from increased demand for holidays and leisure activities. However, both restaurants and clothing sales declined for the third consecutive month, as consumers reduced discretionary spending to cope with rising household bills.

Barclays’ report, which combines hundreds of millions of customer transactions with consumer research, offers an in-depth view of UK spending. Consumer card spending increased slightly from 4.0% in March to 4.3% in April, but remains below the latest CPIH inflation rate of 8.9%. Rising costs continue to strain the finances of UK citizens.

Spending on groceries grew by 5.5%, significantly lower than the latest ONS food price inflation rate of 19.2% and smaller than March’s growth of 7.1%. As a result, 89% of shoppers expressed concern about the impact of rising food prices on their household finances, and 67% are seeking ways to reduce their weekly shopping expenses.

Consumers are saving money by buying discounted items nearing expiration, using vouchers or loyalty points, and switching to cheaper product options. For example, 27% of shoppers have shifted from supermarket premium ranges to standard or value ranges, while 24% have swapped fresh food for frozen food.

Spending on fuel dropped by 9.3% due to falling petrol and diesel prices, while public transport spending increased by 11.9% compared to the same period last year. Utilities spending experienced a lower year-on-year growth (34.4%) compared to March (39.3%), mainly due to the energy price cap increase in April 2022.

Despite 90% of Brits expressing concern about the impact of rising household bills, spending on non-essential items increased in April (4.6%) compared to March (3.5%). The Easter weekend and arrival of spring encouraged more Brits to engage in social and outdoor activities, resulting in growth for sports & outdoor retailers and a boost for bars, pubs, and clubs.

However, restaurant and clothing sales continued to decline as consumers cut back on discretionary spending to cope with rising household bills. Spending on entertainment, particularly for events such as the Eurovision Song Contest in Liverpool, increased by 12.0% year-on-year.

At-home entertainment and “insperiences” also saw increased demand, with digital content and subscriptions experiencing the largest rise since September 2021 (8.6%) and fast food sales increasing by 9.0%.

Despite inflationary pressures, consumers are still booking holidays for later in the year, with airline spending rising by 32.1% year-on-year. Consumer confidence in household finances and non-essential spending has increased compared to last month, and optimism in the UK economy’s future has risen by two percentage points.

Esme Harwood, Director at Barclays, said: “The arrival of slightly warmer weather, along with the Easter Bank Holiday weekend, led to more Brits venturing outside to enjoy social and leisure activities in April.

“Entertainment received a boost, as music fans rushed to book tickets to the Eurovision Song Contest in Liverpool. Meanwhile, Brits are still searching for ways to reduce spend on essentials, so they can enjoy experiences such as holidays, shows and concerts.”

Abbas Khan, UK Economist at Barclays, said: “High inflation continues to squeeze real household disposable incomes and constrain consumption. However, this has been somewhat offset by the decline in wholesale energy prices and the extension of the Energy Price Guarantee, which are contributing to an improvement in consumer confidence.

“The data suggests that pockets of the economy, particularly the leisure sector, enjoyed some renewed momentum in April. Going forward, while energy bills are set to fall from Q3, higher mortgage rates cloud the outlook as households continue to refinance at significantly higher rates through the year.”