UK consumers are opting to spend their money on trips to the cinema and holidays instead of splurging on Christmas presents, according to credit card spending figures released by Barclays. The data indicates that falling inflation has resulted in increased consumer confidence, prompting individuals to prioritize experiences and entertainment over traditional gift-giving during the festive season. While holiday bookings, Christmas parties, ticket sales for events like Glastonbury, and the release of films such as ‘Wonka’ contributed to the surge in spending, the anticipated Christmas shopping frenzy failed to materialize.
Compared to the previous December, consumer card spending in the UK grew by just 2.3%, a significant drop from November’s growth of 2.9%. The grocery and retail sectors, which typically experience a boost in sales during the holiday season, did not see the expected increases. Spending on essential items also slowed, with fuel spending falling by 13% due to declining prices, and supermarket shopping witnessing only a modest year-on-year increase of 2.8%, which is the lowest since September 2022.
Conversely, specialist food and drink stores, including butchers and delicatessens, experienced a 5.1% increase in sales as consumers opted for premium, seasonal ingredients and supported local businesses in the run-up to Christmas. However, clothing and department stores saw declines of 2% and 0.2% respectively after a November spike, which was likely a result of retailers launching their festive promotional activities earlier than usual.
The data revealed a significant increase in spending on entertainment and travel, with a 12% and 14% rise respectively. Consumers opted to book experiences and getaways for 2024, including trips to the cinema to watch new releases like ‘Wonka’. Christmas parties and gatherings contributed to a 7.9% boost in spending at pubs, bars, and clubs, while restaurants, although still 8.8% lower compared to last December, experienced their best month since August.
A survey conducted by Barclays found that 15% of Britons plan to take more holidays in 2024 than in recent years, with 11% saving up for bigger vacations and 10% looking to take advantage of deals during the January sales. However, the recent increase in the energy price cap on January 1 has raised concerns among 87% of respondents regarding the impact of rising household bills on their personal finances. As a result, 35% plan to reduce their usage of lights and heating, while 28% will prioritize wearing more layers and using hot water bottles to stay warm during the winter.
Despite concerns over rising energy costs, 67% of consumers expressed confidence in their household finances, with 73% believing they can live within their means each month. This level of confidence in personal finances is the highest since November 2021, indicating an overall positive outlook among UK consumers.
Karen Johnson, head of retail at Barclays, commented on the spending trends, stating, Hospitality and leisure businesses will be encouraged by December’s strong growth, particularly in the entertainment category, which saw growing demand for live shows, new films, and TV series. 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 Britons had been making the most of these deals and completed most of their Christmas shopping by December.
While apprehension around the upcoming energy price cap increase remains, the decrease in the inflation rate offers a glimmer of positivity, and the slight increase in optimism among the population as the new year begins is encouraging.
In summary, UK consumers have chosen to prioritize experiences such as cinema visits and holidays over Christmas shopping, as indicated by credit card spending figures. Falling inflation has played a significant role in boosting consumer confidence, prompting individuals to invest in entertainment and travel experiences. Although spending on essential items slowed, specialist food and drink stores enjoyed increased sales. The survey conducted by Barclays revealed that many consumers are planning to take more holidays in 2024, with concerns about rising household bills dampened by overall confidence in personal finances.
