Consumer spending grew 5.1% in November – the second highest year-on-year increase following record growth of 5.5% in October – as consumers spent more on the forecourt and in supermarkets than the same month last year.
Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows the headline growth figure was driven by increased spending on essential items, comprising roughly a quarter of the overall growth, which hit a record high of 4.7% in November.
Spending in supermarkets was up 1.6%, whilst that on petrol purchases was up 11.7%.
This marked only its fourth increase in 27 months – and the highest figure since Barclaycard began issuing data in 2011 – due to increased prices at the pump, with a litre of unleaded petrol at 116p, the highest price so far this year and a jump from the 108p recorded at this point in 2015.
While non-essential spending still grew strongly at 5.4%, the gap between the spending on items deemed necessities and on those where consumers have greater discretion has narrowed, suggesting a shift in shoppers’ priorities as they start to feel the impact of price increases across some essential items.
Despite signs that shoppers may soon have to make some tough decisions on where they spend their money, consumers continued to splash out on experiences in November. Travel spend growth received a welcome uptick of 6%, following a brief dip in October. Pubs and restaurants continued to be top-performing categories, with growth of 14.2% and 13.5% respectively, as consumers took shelter from the cold weather by socialising with friends and family.
The drop in temperature in November also drove shoppers to the high street to update their winter wardrobes, pushing spend on clothing up to a six-month high of 5.4%.
In October, eight in 10 (81%) consumers expected that changes in inflation would cause the price of everyday goods to rise in the next 12 months, and November’s data suggests this may have driven them to bring forward big-ticket purchases ahead of the New Year. Furniture store spending grew 5.3%in November, its best performance in seven months.
Some consumers may have also taken advantage of Black Friday deals to buy larger items for the household. Separate data released by Barclaycard shows that this year’s Black Friday proved popular with consumers, with spend up 2.3% on the sales day year-on-year. This growth figure was an increase of 37% on an average Friday.
Looking ahead to December, nearly four in ten (38%) shoppers say they are planning to spend more this month, with groceries and supermarkets (41%) set to be the big winners as consumers prepare to host friends and family over Christmas. To compensate for this extra expense, however, a quarter (26%) say they will have to cut back on other purchases in the months ahead.
Concerns over the wider economic picture continue to dampen sentiment, with only a third (33%) expressing confidence in the UK economy and 55%in their household finances. This continues the subdued levels seen in 2016, which are down on the average figures in 2015, when the proportion of those confident was 45% and 71% respectively.
When looking at the world more widely, consumers are even more cautious – only 21% are confident in the global economy, perhaps due to the outcome of the US election, representing an 11% slide from the peak (32%) seen in September.
Paul Lockstone, managing director at Barclaycard, said: “November was another strong month for consumer spending growth, the second-highest level we’ve seen this year. Whilst some pockets of discretionary spending, such as that on entertainment, was up again by double-digits, most noticeable was the amount households are spending on day-to-day necessities, with supermarket shopping and petrol hitting an all-time high.
“Though there is little visible evidence of households yet being forced to decide between filling up the car or eating out with friends, the narrowing gap between essential and non-essential spend growth means they may need to look more carefully at how they allocate their cash once Christmas is out of the way.”
