Spending momentum ‘still with travel in September’, says Barclays

The research found consumer card spending had grown by 4.2% year-on-year in September, higher than August’s growth of 2.8%. Barclays said the late summer sun had boosted in-store spending, but increased cost of food and fuel had been part of this.

Spending on essential items grew by 4.6%, considerably higher than last month’s 1%. This was largely driven by rising petrol and diesel prices, as well as a 7% uplift in spending on groceries.

Barclays warned with Christmas approaching there would be some belt-tightening by consumers. It said 44% of Britons were planning to reduce discretionary spending over the next couple of months to save money for the upcoming festive period.

Outlook still ‘weak’

Jack Meaning, Barclays’ chief UK economist, warned: “Over the last few months, a picture has been building of consumers beginning to pull back on discretionary spending as the cost of living and monetary tightening from the Bank of England increasingly bite. We’ve seen the warning signs from surveys and now we see it in the more concrete spending data.

“This suggests the outlook for consumers and the businesses that rely on them is weak, even as they finally see their disposable incomes rise faster than inflation. It makes it hard to see anything but a relatively stagnant economy on the horizon.”