Consumer spending increased 4.2% in May as falling prices combined with greater confidence gave consumers a reason to splash out a little more, latest monthly spend data analysis by Barclaycard.
Spend on non-essential items increased 6.2% driven by eating and drinking out, with spending on restaurants rising 16.7% and spending in pubs increasing 14% – the highest reading in the past 13 months. In addition, spending on cinemas went up 28.5%.
The new figures found a 57% year on year growth on spending online with restaurants and a 9.9% rise in pubs.
The latest monthly spend data showed that falling prices in supermarkets are helping families boost spending on non-essential items such as films and holidays.
With the inclement weather seen in May 2015 – when maximum temperatures were at their coldest since 1996 – spending on travel also increased 7.7%. The search for more sunshine resulted in significant gains in spending on airlines, which grew 3.6% on May last year – double the growth seen in April – and spending on hotels which reached 5.7%.
Consumers also showed a return to investment in big ticket purchases, possibly as the certainty of the General Election result allowed them to plan ahead. Spending in furniture stores rose 9% against the same time last year, recording its best performance in over two years.
However, the strong start to the year in the retail sector turned out to be short-lived. Spending on clothing grew only 0.9%, the lowest reading since June 2013, and spending in department stores slowed to 3%. As consumers continued their search for value, though, discount stores proved the big winners, recording 11% year-on-year growth.
Chris Wood, chief operating officer at Barclaycard, said: “With the wider economic context moving in their favour, the clear election result removing some of the lingering uncertainty of how household budgets might fare in the future, and deflation providing further opportunity to cut the cost of essentials, consumers have been quick to make the most of their increased spending power.
“Spending on entertainment and leisure, as well as bigger ticket items such as furniture, electronics and holidays was all up strongly in May. Consumers’ feeling of confidence is leading to them spending more on the enjoyable things in life.”
