February discretionary spend slowdown fails to dent pubs and restaurants
A slowdown in growth in discretionary spending to 3.5% in February didn't dent the pub and restaurant categories, which still saw strong increases in spending over the course of the month.
That's according to the latest data from Barclaycard, which processes nearly half of the nation's credit and debit card transactions.
While consumers spent on average 4% more year-on-year in February, driven by the highest-ever increase in "essential" item expenditure (6.1%), non-essential spend growth slowed for the fifth consecutive month to 3.5%. Within that, consumers rowed back on material goods in favour of experiences, reflected in a 13.3% rise in pub spending, and an 11.4% increase in restaurant spending. Cinema, event and theatre ticket spending climbed by 23.3%.
Barclaycard said that the propensity to spend on social occasions showed that consumers were still willing to spend on treats, with more than a fifth (22%) planning to increase their expenditure on holidays next month. This is partly supported by an uplift in those expressing confidence in their household finances, which climbed to 60% in February, rising from 54% the month before. Meanwhile, confidence in the UK economy remained broadly flat (37%), up 1% on both January 2017 and the same month in 2016.
However, concerns around the wider economic picture are still evident, as four in 10 (41%) of consumers say that uncertainty around the imminent triggering of Article 50 is undermining their confidence in the UK economy. Fluctuations in the value of the pound, causing the price of goods to increase made 28% feel downbeat about the economy.
Nearly three in 10 (29%) expecting to spend more on groceries in the next four weeks. Over the coming months, half (52%) of consumers say they expect to reduce their spending on entertainment and social occasions as a result of the need to spend more on essentials such as groceries and petrol.
Paul Lockstone, managing director at Barclaycard, said: "Consumer spending remained strong in February, but the picture isn't wholly positive. Rising prices were at least in part responsible for the highest growth in spend on essentials in nearly five years, with the phenomenon of ‘shrinkflation', where people get less product for their money, also prompting consumers to row back on some areas of discretionary spending.
"Despite this, and continuing underlying concerns about the economy, we saw a small yet welcome uplift in the number of consumers confident in their household finances, which meant they continued spending on the ‘experience economy', with entertainment and leisure particularly robust."
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