Consumer card spending grew 1.0 per cent year-on-year in February – lower than January’s 1.9 per cent increase and less than the latest CPIH inflation rate of 3.9 per cent. In anticipation of higher bills, consumers are cutting back on essential outgoings, but still prioritising discretionary purchases, contributing to an uptick in optimism in the health of personal and household finances.

Key Findings

• Essential spending contracted in anticipation of higher outgoings while discretionary categories held strong.

• Prudent budgeting contributed to consumers feeling more confident in their household finances despite persistent concerns about inflation.

• The retail sector saw marginal gains, propped up by a surge in electronics sales, as shoppers upgraded lockdown purchases.

• Subscription spending marked two years of consistent growth – owing to ‘streamflation’ and popular new series ‘The White Lotus’ and ‘Severance.

• The Barclays Consumer Spend report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending.

All four consumer confidence measures improved in February. Confidence in household finances reached the highest level Barclays has seen since it started tracking this measure in 2015, at 75 per cent (up from 70 per cent in January). This is perhaps in part due to prudent money management, as 40 per cent say they are finding ways to save money amidst increasing costs.

Confidence in consumers’ ability to spend more on non-essential items rose to 59 per cent (from 56 per cent), while discretionary spending remained in growth at 2.1 per cent. This was offset, however, by a dip in essential spending (-1.0 per cent), suggesting shoppers are finding ways to prioritise lifestyle purchases while making savings.

Economic confidence also climbed in February, after a slump at the start of the year. Consumers are feeling more optimistic about the strength of the global, European and UK economy, with the latter reaching 25 per cent – up four percentage points month-on-month.

Despite these improvements, nine in 10 (89 per cent, up from 86 per cent in January) say they are concerned about rising household bills, with water, energy and council tax amongst the essential costs set to increase in April. Concerns about inflation also persist, reaching their highest level since September 2023, at 88 per cent.

A mixed bag for retail

The retail sector saw marginal growth of 0.6 per cent, down from 1.2 per cent in January. Electronics, however, bucked this trend and enjoyed its greatest increase since 2021, up 6.7 per cent. This is potentially due to upgrades to home-entertainment and technology purchased between 2020-2021, given the typical lifecycle of these products, as well as new launches in February, such as the iPhone 16E.

More shoppers (67 per cent, up from 64 per cent in January) said they are actively looking for ways to get better value from their weekly shop. Of these cost-conscious shoppers, three in five (57 per cent) are looking out for loyalty scheme discounts and deals, while 52 per cent are buying more items on offer, and 49 per cent are shopping at discount supermarkets.

‘Streamflation’ returns

Almost nine in 10 (88 per cent) UK adults are signed up to at least one subscription service. The most popular subscriptions are film and TV streaming platforms (67 per cent), with consumers spending £175 on average a year each year on these services. This is followed by household essentials (61 per cent) and premium and prime delivery options (48 per cent).

Barclays data showed spending on digital content and subscriptions increased 5.1 per cent in February – marking two years of consistent growth for the category. One in 10 (9 per cent) say they have, or plan to sign up to a subscription service so they could watch a popular new series such as ‘The White Lotus’ or ‘Severance’.

However, rising prices remain front of mind as three in five (61 per cent) are concerned about the cost of digital content and subscriptions – otherwise known as ‘streamflation’. To avoid overspending, three in 10 (28 per cent) have reviewed their subscriptions to make sure they are only paying for what they use, and one fifth (20 per cent) have cancelled or are planning to cancel a subscription because it has become too expensive.

Arrival of spring inspires healthy habits

Over a quarter (27 per cent) of UK adults plan to focus more on healthy eating as the warmer weather approaches. One in three (30 per cent) say they are paying closer attention to ingredient and nutrition labels and a fifth (22 per cent) have considered, or are already growing, their own fruit and vegetables at home.

This comes as 27 per cent say they’re more likely to visit shops and restaurants that offer “healthier” options, increasing to 45 per cent for those aged 18-24. Sought after alternatives include zero-sugar treats (33 per cent), organic or whole foods (29 per cent) and low or no alcohol drinks (24 per cent).

The approaching season is also inspiring two fifths (40 per cent) of consumers to ‘spring clean’ their finances by reviewing their budgets and finding ways to cut back. A fifth (21 per cent) plan to track their spending to spot areas where they can save money, and the same number (21 per cent) plan to review their service and utility providers to ensure they’re getting the best deals.

Karen Johnson, Head of Retail at Barclays, said:

“It’s encouraging to see confidence in household finances reaching a record high as consumers are making conscious adjustments to their essential spending, by reviewing their budgets and setting financial goals."

“Shoppers are clearly seeking more bang for their buck, while prioritising healthy habits, and finding a balance between caution and comfort ahead of the upcoming increases to household bills.”

Will Hobbs, Head of UK Multi-Asset Wealth at Barclays, said:

“The outlook for the UK economy remains better than widely anticipated. Much of the prospective uncertainty continues to rest uneasily on assumptions that the decade past must be prologue. Aggregate household financial strength allied to positive real wage growth and a gathering industrial revolution are all reasons to think that the path ahead may be a little brighter.”