Consumer spending growth slows in January as the outlook for 2014 remains uncertain

Consumer spending growth slows in January as the outlook for 2014 remains uncertain

Consumer spending growth slows in January as the outlook for 2014 remains uncertain

The FINANCIAL -- Consumer spending grew only marginally in January as consumers remained unsure about the economic conditions ahead, according to Barclaycard, which processes nearly half of all the UK’s debit and credit card transactions.

 

Although headline spending growth was 4.2 per cent in January, this was skewed by a four day period in January last year when heavy snow in the UK caused widespread disruption. Excluding these four days, where year-on-year spend growth was 17.9 per cent, spend was ahead by just 2.2 per cent.

Where spending was up, it went on eating out, clothing, and going away; restaurant spending was nearly 17 per cent higher, 15 per cent more was spent on clothing, and hotels saw spend rise 9 per cent, according to Barclaycard.


In contrast, spending on utilities was down nearly 15 per cent and supermarket spend was down by nearly 2 per cent as consumers needed to spend less on heating their homes and stocking cupboards, allowing them to spend more on updating their kids’ wardrobes, eating out and taking a weekend away.

Online spending was up 7.7 per cent and in-store spend grew by a healthy 3.1 per cent after last year’s snow forced shoppers to stay at home.

The average amount spent per transaction continued to come down – falling 3.3 per cent on last year and 5.3 per cent on 2012. A legacy of the economic downturn is shoppers’ consistent search for value and determination to save money on their purchases.

Retail spending rebounded in January, led by an increase in spend on clothing (11.0 per cent) which saw double-digit growth first time in the last two years. This in turn was driven by the strong performance of clothing for the family (up 15.0 per cent) which contributes for around two-thirds of total clothing sales. January sales and on-going retailer discounting saw department store spend surge 9.0 per cent, reversing the trend of 2013 where they struggled with month after month of decline, according to Barclaycard.

 

Restaurant spend witnessed impressive 16.6 per cent year-on-year spend increase – the highest level seen in the past eight months. Hotels also grew by a solid 8.9 per cent, benefitting from the better weather, which also saw airline (3.8 per cent) and cinema/theatre (2.6 per cent) spending up.

Spending on utilities was down 14.8 per cent compared to January last year as a combination of milder weather and Government measures helped bring bills down.

Supermarket’s struggled to maintain a consistent level of spending –falling 1.7 per cent; the fifth monthly fall in a row. Consumers made more trips (the number of transactions was up 5.6 per cent) but spent less each time (the average transaction was down 6.9 per cent).


Clothing continued to benefit strongly from online spending as shoppers looking for women’s and family clothing increasingly turned to the web. And echoing the booming housing market, spending at online Furniture and DIY Stores was up significantly, 38 per cent and 31 per cent respectively.

All regions bar Scotland saw spending above inflation (2.0% in December), according to Barclaycard.