Festive activities boosted the hospitality and leisure sector, with 8.9% growth year-on-year in December.
According to research from Barclays, Christmas parties fuelled spending at pubs, bars and clubs, up 7.9%, while restaurants, though still in a -8.8% decline, had their best month since August.
The comparatively smooth running of transport networks helped the sector in December, compared to 2022 when industrial action hampered Christmas plans.
Overall, consumer card spending grew 2.3% year-on-year, less than the latest CPIH* inflation rate of 4.2% and lower than November’s growth of 2.9%.
Moving into the new year, energy costs are still causing concern despite climbing consumer confidence, says Barclays.
The energy price cap increase is playing on the minds of many, with 87% of those surveyed, concerned about the impact of rising household bills on their personal finances.
Meanwhile, 35% are planning to switch on their lights and heating less frequently, while 28% will be prioritising wearing more layers and using hot water bottles to keep warm this winter.
However, 67% are feeling confident about their household finances and 73% about their ability to live within their means each month - likely as a result of falling inflation and mortgage rates.
Karen Johnson, head of retail at Barclays, said that hospitality and leisure businesses would be encouraged by December’s strong growth.
“Meanwhile, grocery and retail spending didn’t see as much of an increase as we might have expected during the height of the festive season.
”This is likely due to many retailers and supermarkets starting discounts and promotional activity earlier than usual, meaning that many Brits had been making the most of these deals and completed most of their Christmas shopping by December”, she said.
“While the upcoming energy price cap is weighing on Brits’ minds, the falling rate of inflation offers a glimmer of positivity and it’s encouraging to see the nation’s optimism increase slightly as we head into a new year.”
Jack Meaning, chief UK economist at Barclays, added, “We saw inflation fall significantly at the end of 2023, and we expect it to fall further in the opening months of 2024.
”This puts more spending power in the pockets of UK consumers and should help support them to continue to spend, even against the tough backdrop of weak economic growth.
”It’s also encouraging to see tentative signs of an improving mortgage market; approvals have begun to rise and mortgage rates are continuing to fall.
”However, it’s worth remembering that many people this year will still be dropping off of fixed-term mortgages onto new deals with higher rates than they had previously, eating away at some of their newly found spending power.”
