DATA: Retail spending growth slows in November as consumers remain cautious

BRITAIN-INFLATION-RETAIL

Consumer spending growth rose 2.8% year-on-year in November, maintaining the muted levels seen throughout the second half of 2017, a new study has found.

With inflation running at 3%, it marked the second consecutive month where household expenditure contracted in real terms.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, revealed that consumers continued to manage their spending cautiously following months of rising prices and stagnant wage growth.

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Tough times endured on the high street with in-store spending at -0.1%, the seventh straight month in negative territory. Although online spending posted a double-digit increase of 10.8%, this is down from an August high of 15.7%, with November marking the third successive month in which growth in online spend has slowed.

Essential spending growth of 3% was broadly in line with October’s figure (2.9%). Growth in non-essentials, however, rebounded as consumers tweaked their allocation of spending on the ‘nice-to-haves’, rising 2.8% from 2.2%.

November’s muted spending figures reflect the cautious mood of the nation, said Barclaycard. Only 30% of consumers feel confident in the UK economy, down from 37% at the end of September. A gap of 30 percentage points now exists between those who are confident and those who are not – the second widest since Barclaycard began tracking consumer confidence in 2014.

Many savvy consumers, however, are trying to maximise their budget – indicated by a flurry of re-mortgaging activity from September in anticipation of the interest rate rise, and the fact that one in five (20%) shoppers say that they plan to spend more on discounts during seasonal sales, from Black Friday and Cyber Monday through to Boxing Day.

Bearing this out, Barclaycard saw a 32% rise in transaction volumes and a 7% increase in values processed on Black Friday 2017 – with a record-high 998 transactions processed per second this year, beating the high of 771 transactions per second on Black Friday 2016.

Paul Lockstone, managing director at Barclaycard, said: “Consumer sentiment has deteriorated over the last couple of months after a prolonged period of falling purchasing power. Against this backdrop, it’s not surprising that consumers continue to spend conservatively, leading to a second successive month of contraction in real terms.

“While entertainment spend brought some welcome relief, growth on essentials outstripped expenditure on nice-to-haves for the third month in a row, indicating that shoppers are prioritising carefully. Nevertheless, the search for value continues with Brits seeking sales and discounts, making the most of their budget during the festive season – as we saw with a strong performance on Black Friday.”

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