Card spending returns to growth in August as the summer heatwave and ‘Sweet Treat Economy’ lift spirits
Consumer card spending returned to growth in August, rising 1.0 % year-on-year following two consecutive months of decline, although it remained below the latest CPIH inflation rate of 3.1 %. Non-essential spending also bounced back (up 0.7 %) thanks to the late arrival of barbecue and picnic weather propping up butchers, delicatessens and garden centres. Meanwhile, nearly half of Brits report treating themselves to affordable, mood-boosting luxuries, such as pastries and cosmetics, even while tightening budgets.
Spending on groceries (up 1.9 %) saw its largest uplift since March this year (2.7 %), fuelled by robust growth at food and drink specialist stores – such as butchers and delicatessens – which saw their largest increase (5.1 %) since January 2024 (5.2 %), thanks to Brits enjoying barbecues and picnics outdoors in the sunshine.
Supermarkets (up 1.5 %) also saw their highest growth since March this year (2.8 %), in part reflecting a shift towards healthier home cooking. Nearly half (45 %) of Brits say they are prioritising buying raw or whole-food ingredients to prepare fresh meals and snacks, in order to avoid ultra-high-processed foods.
The Sweet Treat Economy
Almost half (47 %) of consumers say that they continue to spend on small, luxury purchases that bring them joy, even when trying to make cutbacks. Sweet treats, such baked goods, are the most popular type of pick-me-up that these joy-seekers prioritise (45 %), perhaps influenced by the rise of viral sensations like the ‘crookie’ and the ‘Dubai chocolate bar’ on social media.
Demand for little luxuries also bolstered pharmacy, health and beauty retailers, with the category enjoying yet another month of growth (7.3 %) – the highest since January 2023 (10.2 %) – reflecting the long-running trend of shoppers prioritising cosmetics even as budgets tighten, often referred to as the ‘lipstick effect’.
Double-dip shrinkflation
Concerns related to shrinkflation – i.e. products getting smaller but costing the same – remained stable in August, with eight in 10 reporting that this trend is having a negative impact on their household finances.
A quarter (26 %) have also started to spot ‘double-dip shrinkflation’, where products go through two or more rounds of size reductions, without a corresponding reduction in price. The top five most frequently cited products hit by ‘double-dip shrinkflation’, according to this group, are chocolate (57 %), crisps (44 %), packs of biscuits (41 %), snack bars (36 %) and sweets (36 %).
Retail sector shows green shoots
The retail sector (up 0.1 %) returned to growth for the first time since March this year, while brick-and-mortar businesses witnessed the ongoing resurgence of in-store shopping. The recent heatwave contributed to a return to the high street, with 55.7 % of all credit and debit card spending in August conducted face-to-face (as opposed to online) – the highest level so far this year.
The retail sector also benefitted from an 8.0 % increase in spending at garden centres – the category’s largest uplift so far in 2024 – as the drier and hotter weather across large parts of the UK encouraged Brits to invest more time and money sprucing up their outdoor spaces.
However, the sunshine has not had as much of an impact on clothing retailers, which saw only a mild improvement, declining by a marginal -1.7 % compared to -2.3 % in July. Clothing remains one of the most common areas where discretionary spending is reined in – of the 46 % of Brits who say they’re planning to make cutbacks, 53 % say they’ll spend less on clothing and accessories.
Cut-price travel deals snapped up
The travel sector (up 6.8 %) had a particularly strong month, following news that several low-cost airlines have been offering last-minute holiday deals in order to tempt Brits abroad. Travel agents (up 7.2 %) and airlines (up 8.3 %) both had strong months, seeing their highest growth since February and March respectively.
Consumer confidence climbs despite Christmas cost concerns
Looking ahead to the upcoming festive season, over a third of Brits (35 %) anticipate that this Christmas will be more expensive than last year, and one in five (19 %) is worried about how they’ll keep up with those rising costs. Meanwhile, a quarter (24 %) are concerned that shrinkflation will mean they get less value for money on their festive spending.
That said, the summer spirit has arrived for the vast majority – Brits are feeling noticeably more confident in both their household finances (70 %) and ability to live within their means (73 %), compared to last month (65 % and 70 % respectively).
Karen Johnson, head of retail at Barclays, said: “The long-awaited British summer has unlocked pent-up demand across a number of retail categories, such as garden centres and butchers, as many Brits dusted off their barbecue for the first time this year.
“We’re also seeing an emerging trend of consumers indulging in retail therapy for mood-boosting pick-me-ups, often in the form of sweet treats and cosmetics. This is a much more immediate version of the long-running trend of consumers making room in their budgets for memorable experiences, like tickets for next year’s Oasis tour, which went on sale over the weekend.
“While cost-conscious shoppers continue to rein in discretionary spending to account for rising prices, especially in the run-up to Christmas, it’s encouraging to see that Brits are feeling noticeably more confident in their personal finances – a strong indicator of future spending as we approach the crucial festive period.”
Jack Meaning, chief UK economist at Barclays, said: “Having seen government spending drive the economy in the second quarter, and private consumption relatively muted, this data very much supports our view that the balance will shift over the second half of the year and into next. Growing real incomes and strengthening consumer confidence should combine with falling interest rates to increasingly allow consumers to put their spending power to work.”
Overall growth figures
| Spend Growth | Transaction Growth | |
| Essential | 1.6% | 2.9% |
| Non Essential | 0.7% | 2.1% |
| OVERALL | 1.0% | 2.4% |
| Retail | 0.1% | 2.2% |
| Clothing | -1.7% | 1.7% |
| Grocery | 1.9% | 3.7% |
| · Supermarkets | 1.5% | 2.5% |
| · Food & Drink Specialist | 5.1% | 10.2% |
| Household | -4.4% | 1.8% |
| · Home Improvements & DIY | -5.7% | -2.8% |
| · Electronics | -1.8% | 7.2% |
| · Furniture Stores | -7.8% | -3.9% |
| · Garden Centres | 8.0% | 5.4% |
| General Retailers | 0.6% | -0.2% |
| · General Retailers & Catalogues | 1.4% | 0.4% |
| · Department Stores | 0.8% | 6.0% |
| · Discount Stores | -5.0% | -7.4% |
| Specialist Retailers | 0.6% | -0.3% |
| · Pharmacy, Health & Beauty | 7.3% | 2.3% |
| · Sports & Outdoor | -7.4% | -4.5% |
| · Other Specialist Retailers | -0.6% | -1.9% |
| Hospitality & Leisure | 3.8% | 2.6% |
| Digital Content & Subscription | 8.9% | 5.3% |
| Eating & Drinking | 1.5% | 1.1% |
| · Restaurants | -16.9% | -18.3% |
| · Bars, Pubs & Clubs | 3.2% | 3.1% |
| · Takeaways and Fast Food | 0.7% | -0.1% |
| · Other Food & Drink | 5.1% | 2.8% |
| Entertainment | 0.0% | -0.4% |
| Hotels, Resorts & Accommodation | 2.7% | 2.7% |
| Travel | 6.8% | 5.9% |
| · Travel Agents | 7.2% | 11.7% |
| · Airlines | 8.3% | 1.6% |
| · Public Transport | 1.0% | 1.4% |
| · Other Travel | 9.6% | 16.1% |
| Other | -1.1% | 2.4% |
| Fuel | -2.4% | -0.8% |
| Motoring | -7.3% | 7.7% |
| Other Services | 3.2% | 3.1% |
| Insperiences | 3.0% | 2.0% |
| Online | 1.8% | 2.9% |
| Face-to-Face | 0.3% | 2.2% |