Consumer spending on food rises year-on-year as discretionary spending stalls
Specialist analytics and risk management consultancy, 4most, has found that consumers spent an average of £289 on food per month in the final quarter of 2024. While this marks a slight decline from Q3, it still represents a 4.7% increase compared to Q1 of last year.
Meanwhile, spending on non-essential items remained constrained. In Q4, consumers spent an average of £44.30 per month on mobile phones and £29.10 on clothing. Mobile phone expenditure, which peaked at £51.50 in Q3 2023, did not exceed £45 in 2024 and has been steadily declining year-on-year since 2022. Similarly, despite a 5.4% annual increase in clothing expenditure, it remained well below higher figures recorded in 2023.
With consumer confidence reaching its lowest level (minus 22) in over a year this January according to NIQ, rising costs of essential goods – such as energy and food – are prompting households to prioritise necessities over discretionary spending.
Consumer expenditure | ||||
Consumable | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
Food | £276.0 | £270.7 | £293.1 | £289.0 |
Clothing | £26.8 | £27.0 | £28.6 | £29.1 |
Mobile Phone | £44.9 | £42.3 | £44.3 | £44.3 |
High expenditure on essential goods
Despite a slowdown in overall inflation to 2.5%, the Consumer Prices Index (CPI) rose by 2.5% in the 12 months to December, following a 2.6% increase in November according to the Office for National Statistics.
Additional tax changes, including national insurance adjustments, have increased operational costs for supermarkets, making it unlikely that food prices will decrease in 2025.
According to a recent survey published by the British Retail Consortium (BRC), about two-thirds of chief financial officers warned they will pass on costs from the increase in employer national insurance contributions to consumers.
These trends demonstrate that it is more than likely consumers will continue to face financial pressures throughout 2025, leading to sustained shifts in spending habits.
Andy Johnson, client partner at 4most comments: “Consumer behaviour is constantly evolving and is influenced by multiple factors at both macro and micro levels. The latest figures reflect just how complex the landscape has become, with declining spending on non-essential consumable items highlighting the financial pressures many households are facing and attempting to manage.”
“While headlines may focus on falling rates of overall inflation, the reality is that prices are still increasing and consumers are adapting their spending habits. The rising costs of essentials are playing a leading role in shaping the trends we’re currently seeing.”
“There’s no indication that consumer confidence has improved since the start of the year, and we expect this to be reflected in the upcoming Consumer Confidence Index.”
Dylan Jones, CEO of IE Hub, adds: “It’s no secret that other affordability publications can’t keep pace with shifting consumer spending trends, leaving lenders in a challenging – and potentially risky – position when calculating affordability assessments.
“At IE Hub, we’re confident that our unique platform addresses this by enabling consumers and creditors to share affordability data that is both granular and real-time. This not only ensures more accurate assessments, but also helps businesses to stay ahead of evolving spending behaviours. By understanding how consumers are managing their finances, businesses can make more informed decisions, optimise their strategies, and ultimately drive positive outcomes for both lenders and their customers.”