Consumer card spending grew 9.7% year-on-year in January – slightly above the 9.2% rise in consumer price inflation – owing to strong performances in hospitality as well as retail, entertainment, and travel sectors, according to Barclaycard.

Spending on non-essential items grew 10.4% year-on-year – the largest increase since May 2022 – with pubs, bars, & clubs enjoying an 18.1% boost. Restaurants were up by 4.7% in January compared to a 3.9% decline in December, due to the impact of rail strikes in December as well as the impact of Covid restrictions in January 2022.

The overall rise in consumer card spending was higher than December’s 4.4% and was attributed to new year sales, blockbuster film releases, and a surge in holiday bookings. However, growth in spending also reflect the drop in non-essential spending caused by Covid restrictions.

Supermarkets saw slightly higher growth than in December, primarily due to rising food prices but also due to Brits increasingly opting to cook from scratch and cut down on takeaways. One in four people reported they were limiting takeaways, resulting in the takeaway category seeing its lowest growth (9%) since May 2022.

The travel sector saw a 66.1% uplift, with domestic travel benefiting from a rise in staycation bookings. Hotels, resorts, and accommodation saw 12.2% growth in January, up from 8.2% in December, owing to a combination of Covid restrictions in 2022, higher prices, and pent-up demand.

Despite spending on utilities growing 44.7%, consumer confidence in household finances was at 63%, its highest level since July 2022, as more Brits feel able to live within their means each month.

However, the percentage of Brits who say they are concerned about rising household bills is unchanged at 92%.

Esme Harwood, director at Barclays, said: “January saw a number of categories bounce back from last year’s Plan B restrictions thanks to Brits booking holidays, taking trips to the cinema, and snapping up bargains in the sales.

“However, while it’s encouraging that confidence in household finances saw a slight boost, it is clear that Brits will still need to find ways to manage their budgets over the coming months amid rising grocery price inflation and mounting utility bills.”

Silvia Ardagna, head of European economics research at Barclays, said: “The recent rise in UK card spending is due in large part to inflation, base effects from last year’s Plan B restrictions, and probably some statistical effects resulting from the strikes.

“Looking ahead, we think that the UK economy is likely to contract in Q1, as demand drops in real terms due to the loss in household purchasing power, as well as rising energy and mortgage bills. However, the silver lining is that the labour market remains tight, with low unemployment and elevated wage growth.”