Recent research released by Barclays indicates that consumer spending trends in the UK are showing mixed signals as the economy navigates through uncertainties related to rising household bills and imported product prices. The Barclays Consumer Spend report, which collates data from millions of transactions alongside consumer research, reveals that overall consumer card spending increased modestly by 0.5 per cent year-on-year in March. This growth is notably lower compared to February's 1.0 per cent increase and falls short of the recent Consumer Prices Index including Owner Occupiers' Housing Costs (CPIH) inflation rate, which stands at 3.7 per cent.

The report highlights that confidence in discretionary spending remains relatively strong, with 58 per cent of consumers expressing confidence in their ability to spend on non-essential items. However, essential spending has seen a contraction of 2.9 per cent, driven by consumer cutbacks as they anticipate increased household expenses. The research, conducted between April 8 and April 11, found that 37 per cent of UK adults are actively trying to reduce their outgoings, a sentiment echoed by a return to larger shopping trips. Half of respondents now favour doing a 'big shop' instead of multiple smaller trips, as it offers convenience and aids in budgeting.

Concerns regarding the cost of imported goods are notable, with two-thirds of consumers worried about potential price increases. This apprehension has fostered a shift towards supporting domestic products, as 71 per cent of adults indicated a preference for purchasing items that are “Made in Britain”. This trend appears influenced by the ongoing discussions around trade tariffs and their impact on pricing.

Despite the overall dip in essential spending, certain segments performed well. Garden centres, for instance, witnessed a significant 13.4 per cent growth—the highest recorded by Barclays since tracking this category began in January 2024. Spending on food and drink specialist stores rose by 4.3 per cent, possibly due to a heightened interest in artisan products as consumers shift away from larger supermarket chains.

Hospitality and leisure sectors reported a 2.8 per cent increase in spending, suggesting that consumers are placing a higher value on experiences over material purchases. Travel expenditure climbed 5.7 per cent year-on-year, with notable growth in travel agents (7.1 per cent) and airlines (7.4 per cent). Karen Johnson, the Head of Retail at Barclays, commented on this trend by stating that consumers are feeling the pressure of rising bills and are adopting more prudent budgeting practices.

In contrast, spending on digital content and subscriptions benefited from popular shows, witnessing a 5.7 per cent increase. However, concerns about value emerged, with 31 per cent of consumers feeling they are receiving less value for their subscriptions, leading to cancellations and pauses in payments for some services.

Economic confidence in the UK also saw a slight decline, falling to 24 per cent in March from 25 per cent in February, indicating a cautious outlook among consumers regarding future financial stability. Barclays' experts predict that consumer spending may remain muted into mid-2025, with expectations of a potential pickup as interest rates begin to ease.

The data emphasises the complex landscape of UK consumer spending habits in the face of rising costs and economic uncertainty, illustrating both the resilience in discretionary spending and the pressures affecting essential expenditures.