Consumer spending grows but supply chain shortages hit confidence

Consumer card spending jumped by 13.3% in September compared to the same month in pre-pandemic 2019, as Brits enjoyed a warm end to the summer, but supply chain shortages and rising prices have dampened consumer confidence.

Spending on essential items recorded its highest growth in over two years in September, according to new data from Barclaycard, as fuel prices climbed and demand at the pumps soared.

Food prices also notably saw a rise amid the ongoing shortage of HGV drivers making it more challenging to source essentials.

While spending on non-essential items grew 12.9% last month, the increase was slightly smaller than in August (+15.8%), which given rising inflation may also indicate that some consumers are starting to cut-back on discretionary purchases.

Worries about inflation are indeed rife, with 90% concerned that the rising cost of everyday items will negatively impact their household finances.

The number of Brits who felt confident in their ability to buy non-essential items fell 4% in September (59% compared to 63% in August) – the lowest that figure has been since February 2021 - during Lockdown 3.

Some shoppers are already seeking out value in their purchases, as discount stores saw a 29.3% uplift compared to 2019. A further 56% of Brits suggest that if energy prices rise sharply, it will make it harder for them to spend money on nice-to-have items.

However, many sectors also saw considerable growth in September, owing in part to workers returning to offices, the onset of a new school term and preparations for the winter months with home improvements and purchases of warmer clothing, as new AW21 collections hit stores.

Pubs, bars and clubs benefited from a 43.5% boost as colleagues reunited at post-work gatherings, while entertainment saw its strongest growth in more than two years at +28%, with new film releases, gigs and theatre shows encouraging Brits back to venues.

Home improvements and DIY was up 24.1%, and department stores and pharmacy, health and beauty retailers rose 3.6% and 17.5% respectively – the sharpest increases for both categories since May 2021.

Raheel Ahmed, Head of Consumer Products at Barclaycard, said: “The return of pupils and workers to schools and offices helped many sectors to see strong uplifts in September. Pubs, bars, clubs and the entertainment industry benefitted from post-work socialising, while international travel was given a boost as holidaymakers jetted off to warmer climes to squeeze in their last trips of summer.

“Consumers are, however, starting to feel the impact of rising prices on their personal finances, which is also hampering confidence levels. While this is causing some Brits to seek out value in their purchases, as the festive season approaches, we expect spending to gradually gather pace as shoppers start buying gifts and preparing for gatherings with loved ones.”