Consumer card spending in the UK experienced a 4.2% year-on-year increase in September, driven by a late summer shopping spree.
Although this growth rate was less than the latest CPIH inflation rate of 6.3%, it marked an improvement from August’s figure of 2.8%.
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In particular, spending at pubs and bars surged due to the Rugby World Cup while restaurants and takeaways saw slower growth as people saved for the upcoming festive season.
Spending on essential items jumped by 4.6% in September, a significant increase compared to the previous month’s 1.0%.
This surge was primarily attributed to a rebound in fuel spending, which fell by only 10.9% compared to a steep drop of 20.1% in August, driven by rising petrol and diesel prices.
Additionally, spending on groceries increased by 7.0%, exceeding August’s growth rate of 4.5%.
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By GlobalDataMore consumers are finding ways to cut down their weekly shopping costs, with many opting for budget or own-brand products and taking advantage of multibuy deals.
Mixed sentiments on supermarket loyalty schemes
Nearly half of consumers reducing grocery spending, 47%, are now utilising vouchers or loyalty points to save money.
Meanwhile, 41% are shopping at multiple supermarkets to access various deals.
However, scepticism prevails as 67% of shoppers believe that supermarkets inflate regular prices for some products to make their loyalty scheme discounts appear more attractive.
On the bright side, 40% have noticed supermarkets reducing prices on certain items, such as fruits, vegetables, bread and tinned foods.
“Shrink-Nation” phenomenon grows
In September, 76% of consumers reported noticing more instances of “shrinkflation” compared to 71% in August. Chocolate remained the most commonly affected product, with 48% of respondents citing it as an example.
Additionally, 59% believe that supermarkets should label products that have decreased in size or weight without a corresponding price reduction. This trend reflects growing consumer awareness and concerns about product size changes.
Almost half of consumers, 47%, have observed an increase in “surge pricing,” where companies raise prices during peak demand times.
One in three of those who noticed this trend, 32%, reported higher prices for food and drinks in pubs and bars during peak periods.
However, only 8% of consumers are willing to pay more for dining out during popular times, with an average willingness to pay an extra 70p for a pint of beer and 60p for a glass of wine.
September sunshine boosts non-essential spending
Spending on non-essential items saw a 4.0% increase in September, slightly higher than August’s 3.7%.
The warmer early September weather encouraged Brits to visit the high street and socialise, leading to improved performance in clothing stores and discount stores.
Pharmacy, health & beauty stores recorded a significant 6.9% boost, possibly due to consumers prioritising self-care products during times of economic uncertainty. Bars, pubs and clubs also experienced a 6.1% rise, likely driven by major sports events such as the Rugby World Cup.
Festive saving plans impact restaurants and takeaways
As 44% of Brits plan to reduce discretionary spending in preparation for the festive season, spending at restaurants declined by 10.8% in September, compared to a 5.8% drop in August.
Additionally, growth in takeaways and fast food spending remained flat at 6.5%, well below the first half of the year’s data, which consistently exceeded 9%.
Many expect this Christmas season to be costlier, leading 20% to start buying presents early and 18% to mutually agree to reduce gift-giving.
These trends suggest that consumers are navigating a challenging economic landscape, balancing their spending habits amidst inflation and a rising cost of living.
