Consumer spending declines again

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Consumer spending declined 0.1% year-on-year in October, as the introduction of further restrictions and the arrival of colder weather encouraged Brits to stay at home and turn to online shopping, new research shows.

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Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, reveals that spending on essential items grew 4.2% year-on-year, including a 13.9% rise in supermarket expenditure, although this was the smallest increase in the category since February 2020.

In addition, spending on non-essential items declined 1.7%, compared to the 0.6% growth seen in September.

Home deliveries remain popular as online supermarket expenditure saw 94.4% growth, accounting for 13.7% of total supermarket spend compared to 13.0% in September. Overall online transactions grew by 29% in October, accounting for 45.7% of all retail spend, a steady rise from August (44%), and September (43%).

The research found Covid restrictions are impacting consumer optimism, as household confidence dropped to 67% – a level not seen since May (67%) and down from 70% in September. Confidence in the UK economy also remains low (22%), with less than half as many over-55’s (15%) as 18-34-year-olds (34%) feeling confident, the research reveals.

Raheel Ahmed, head of consumer products, said: “As Brits once again adjust to tighter restrictions, it’s no surprise that the digital habits adopted earlier this year are enduring. As we enter another period of lockdown in England and further restrictions across the UK, this stay-at-and home mentality is likely to persist, as is the popularity of takeaways and digital subscriptions – helped along by the colder weather and darker evenings.

“As the country prepares for a winter under potentially tighter restrictions, and we turn to online for our Christmas shopping, the resilience of bricks-and-mortar retailers will be tested as we wait to see what the rest of the year brings.”