Consumer spending growth slowed to just 1.6 percent in March, its lowest level in two years, as consumers reined in purchases in nearly all categories – that’s according to the latest data from Barclaycard. The East Midlands saw a growth rate of 0.8%.
The figures mark the third successive month of a spending slump, with overall growth for the first three months of the year down to 2.8 per cent – the worst performance in seven quarters.
According to Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, spending on women’s clothing fell 1.2 percent in March and family clothing flatlined at 0 percent, as a wet and windy start to the month discouraged shoppers from updating their wardrobes for spring.
Garden centres also suffered from the poor weather with spending growth falling 3.5 percent year-on-year. Travel spending slowed to 0.8 percent from 5.1 percent in February, which saw a pre-Easter spike in bookings. This was the lowest level of growth for the category since June 2014.
Consumers who stayed in the UK continued to treat themselves and their families, however, with pubs and restaurants two of a small number of categories to maintain a strong level of growth in March, both up 11.9 percent, boosted by Easter and Mother’s Day. In the East Midlands this was particularly pronounced, with spending in restaurants and pubs up 13.1%.
Cinema spend was the star performer, climbing 12.8 percent, helped by the release of Batman v. Superman and the continuing popularity of Zoolander No. 2 and Deadpool.
Consumer thriftiness comes as households face a challenging economic landscape. Only one in three (34 percent) Brits feel upbeat about the UK economy, fewer than at any time since Barclaycard began collecting this data in Q3 2014.
This may be why nearly one in two (47 percent) say they have been more cautious with their spending during the past few months.
Subdued wage growth is also having an impact on consumers’ outlook. Average real earnings are about 6 percent below their 2008 level and just one in four (26 percent) is confident that their personal spending power will rise during the rest of the year.
Paul Lockstone, managing director at Barclaycard, said: “Since the turn of the year we have seen a steady fall in the rate of spending growth, but the continuing impact of global economic headwinds and an uncertain outlook really caught up with consumer spending in March. Spend on non-essential items grew at the slowest rate since 2014, while the emerging trend for compartmentalisation in the weekly shop, with people willing to mix and match between discount stores and more established high street retailers, suggests shoppers continue to place a premium on value for money.
“Some sectors did show encouraging signs, however – notably entertainment and leisure – as consumers continued to spend on experiences, often with loved ones or their families. Looking ahead, it’ll be interesting to see whether shoppers continue this trend, particularly if confidence in the economy continues to wane”.