Barclays, which operates branches in Birmingham, has reported that card spending grew 2.1 per cent in August, reaching a 13-month high as consumer confidence in household finances showed signs of recovery. The bank's latest data reveals that both essential and non-essential spending grew at the same rate, with travel spending rebounding after five consecutive months of decline.
Hospitality and leisure lead the growth
According to Barclays, several hospitality and leisure categories recorded strong performances during the month. Entertainment spending rose by 5.9 per cent, boosted by summer blockbusters driving cinema attendance. Travel spending also rebounded, growing 3.1 per cent after a prolonged period of decline.
The bank, which competes with Santander, HSBC UK, NatWest, Nationwide and other major lenders, said the growth in discretionary purchases contributed significantly to the overall positive picture. Rohan Kumar, Head of Spend Insights at Barclays, attributed the boost to consumers prioritising holidays, social occasions and memorable experiences as summer drew to a close.
Consumer concerns over pricing tactics
Despite the positive spending figures, Barclays found that seven in ten consumers remain concerned about the impact of 'drip pricing' – the practice of adding fees at checkout – with 72 per cent expressing worry. Similarly, 71 per cent said they are concerned about 'dynamic pricing', where prices rise and fall in line with demand.
More than eight in ten (84 per cent) said they are concerned about rising prices overall. Three in four consumers cited 'shrinkflation' – declining product size – as a specific concern (77 per cent), while 76 per cent flagged 'skimpflation', or declining product quality, as a worry.
Economic outlook remains cautious
Jack Meaning, Chief UK Economist at Barclays, said consumer spending and confidence remained resilient in August, even as pressures from the Middle East began to filter into prices. He suggested the positive news indicates consumers should be able to weather a bout of narrowly focussed, temporary inflation that the bank expects in the near term.
However, Meaning cautioned that risk remains. If the situation in the Middle East persists or intensifies in the coming months, squeezed households may need to be even more discerning with their spending, he said.
