Consumer Spending in the UK Slows to Three-Year Low in May
In May 2024, consumer spending growth in the UK hit its lowest level since February 2021, growing just 1% year-over-year, according to a recent Barclays survey. The survey, which polled 2,000 consumers, found that 87% were concerned about the impact of rising household bills on their personal finances.
Significant contributing factors included a 5% average increase in council tax and an 8% rise in broadband and mobile phone costs in April. Additionally, cold and rainy weather suppressed overall consumer activity.
The Barclays Consumer Spend report highlights that spending on non-essential items experienced only a 0.7% increase—the smallest since February 2021. Moreover, spending on takeaways recorded a decline of 0.2%, its first drop since May 2020, as more people curtailed discretionary spending.
Sectors like travel also saw minimal growth, with airline spending increasing by just 5.6% and travel agent spending up by 4.3%. Despite these numbers, some optimism remains: 28% of respondents indicated plans to spend more as warmer weather approaches, an outlook shared by younger consumers aged 18 to 34 at a higher rate of 39%.
Helen Dickinson, Chief Executive at the British Retail Consortium, noted that despite a "strong bank holiday weekend," overall retail sales showed only modest improvement. Similarly, Karen Johnson, Head of Retail at Barclays, pointed to upcoming events like the Euros, Wimbledon, and Taylor Swift’s Eras Tour as potential boosts for the coming months.
Separately, the retail performance in Scotland also showed a slight decline, with total sales falling by 0.5% year-on-year when adjusted for inflation. Ewan MacDonald Russell of the Scottish Retail Consortium mentioned that retailers are hoping for a stronger performance driven by major upcoming events.
The Barclays survey reflects a cautious consumer outlook amid rising costs, with broader expectations of an eventual spending recovery as inflation continues to fall.