In December 2023, the UK witnessed a modest rise in consumer card spending, increasing by 2.3% year-on-year, which fell short of the CPIH inflation rate of 4.2% and was lower than November’s growth of 2.9%. This slowdown was evident in retail spending, which couldn’t sustain its November momentum, despite the boost from early seasonal discounts. However, the entertainment and travel sectors saw a surge as consumers eagerly booked experiences and getaways for 2024.
Essential spending saw a notable deceleration, climbing only 1.8% compared to 3.3% in the previous month. This was influenced by a decrease in fuel spending, which dropped 12.5% due to falling petrol prices. Additionally, supermarket spending experienced its lowest increase since September 2022, at 2.8%, possibly because consumers had already stocked up on festive items in November, leveraging early discounts.
Contrastingly, food and drink specialist stores like butchers and delicatessens enjoyed a 5.1% spending increase, indicating a consumer preference for premium, seasonal ingredients and a desire to support local businesses during the Christmas season.
Festive Cheer in Hospitality and Leisure
The hospitality and leisure sector, particularly pubs, bars, and clubs, benefited from Christmas celebrations, witnessing a 7.9% rise in spending. Restaurants, despite a 8.8% decline, saw their best performance since August. The smooth operation of transport networks in December, compared to disruptions in 2022, also contributed to this sector’s success.
Entertainment Sector Lights Up
December marked a significant turnaround for the entertainment sector, which experienced a 12.3% growth following a decline in November. Ticket sales for events like the Glastonbury Festival and Christmas pantomimes soared. Cinema spending also saw an 8.0% increase, fueled by blockbuster releases.
Streaming and Digital Content Surge
Digital content and subscriptions recorded a substantial 11.6% growth, their highest since August 2021, propelled by price hikes on streaming platforms and a heightened interest in home entertainment during the festive season. Popular releases like ‘Chicken Run: Dawn of the Nugget’ and ‘The Crown’s final series contributed to this trend.
Retail Spending Dips
Clothing and department store spending returned to a decline after a November spike, potentially due to earlier promotional activities by retailers. However, December 22nd emerged as the busiest day of the year for Barclays in terms of transactions processed, driven by last-minute shopping and celebrations.
Travel Sector Soars
The travel sector experienced robust growth, with airlines and travel agents reporting increases of 20.2% and 12.8%, respectively. This uptick was fueled by consumers planning more holidays in 2024, with beach holidays, city breaks, and adventure holidays being the most popular choices.
New Year Resolutions and Consumer Confidence
Many Brits are embracing Dry January for health and financial reasons, expecting to save an average of £48.90 during the month. Financial goals for the year include saving more money, investing in stocks and shares, and increasing pension contributions.
Despite concerns over the energy price cap rise in January, consumer confidence regarding household finances and living within means is at its highest since late 2021 and 2023, respectively.
Karen Johnson, Head of Retail at Barclays, remarked, “Hospitality and leisure businesses will be encouraged by December’s strong growth, particularly in the entertainment category. Grocery and retail spending didn’t see as much of an increase as we might have expected during the festive season. This is likely due to many retailers and supermarkets starting discounts and promotional activity earlier than usual.”
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.”
