Retail recovery and enduring entertainment prop up non-essential spending, as consumers’ inflation concerns ease | Barclays

• Retail continued to recover in October amid widespread promotional activity, boosted by online shopping and the strong performance of clothing and department stores
• Entertainment spend growth reached 13.5 per cent, driven by Coldplay ticket sales, as popular streaming series such as Rivals boosted digital content
• Essential spending saw its greatest decline since April 2020, as food price inflation concerns eased, down four percentage points
• Looking ahead to “Black Friday”, a third of shoppers prefer that it’s now spread over a longer period, although the day itself is still the biggest retail shopping event of the year
• The Barclays Consumer Spend report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending

Consumer card spending grew 0.7 per cent year-on-year in October – less than September’s increase (1.2 per cent) and below the latest CPIH inflation rate of 2.6 per cent. Growth was propped up by spending on non-essential items, which climbed 2.1 per cent, driven by the strong performance of entertainment, up 13.5 per cent, and the recovery of retail, which recorded its third consecutive month of growth.

In October, essential spending saw its greatest fall (-2.2 per cent) since April 2020 (-2.9 per cent). Supermarket spending dipped -0.8 per cent, as consumers’ concerns about food price inflation eased, down four percentage points to 84 per cent compared to 88 per cent in September.

Other confidence measures showed significant year-on-year improvements; confidence in household finances increased nine percentage points compared to last year, at 70 per cent – on par with September. Similarly, 57 per cent feel confident in their ability to spend on non-essential items, up five percentage points year-on-year.

Retail rebounds

Brits’ growing confidence was reflected in retail’s October performance. General Retailers were up 5.2 per cent – the highest growth for the category since September 2023. Spending at department stores also rose by 4.7 per cent, meanwhile, clothing saw a 1.9 per cent boost, after growing 4.5 per cent in September. This comes as new clothes and accessories were no longer cited as the number one cutback for shoppers limiting their spending – now at 48 per cent (down from 55 per cent), and overtaken by meals out and takeaways, both at 50 per cent respectively.

Black Friday splits opinions

As retail continues to show signs of recovery, many shoppers are already planning ahead for Black Friday. Two in five (37 per cent) say they intend to shop during the sales period this year, while a similar proportion (45 per cent) say they prefer browsing Black Friday deals online, with just 16 per cent preferring to shop in-store. Three in 10 (29 per cent) have saved items in their online basket so they can monitor if they’re discounted on Black Friday, and a third (33 per cent) are hoping to buy their Christmas presents in the sales.

Pointing to the changing nature of Black Friday – 33 per cent of shoppers say the retail milestone is better for them now that it is spread out over a longer period, but two in five (39 per cent) no longer look forward to the seasonal sales as much as they used to. Despite this, Black Friday spending increased 3.3 per cent year-on-year in 2023, and has remained the busiest day for retail spending (excluding groceries) for five consecutive years.

Coldplay lifts entertainment spend to high note

Entertainment was another standout category in October, building on September’s strong performance, reaching 13.5 per cent growth year-on-year. This boost was largely driven by Coldplay World Tour ticket sales. Digital content and subscriptions also grew 9.7 per cent, as streamflation – the rising price of streaming services – continued, while popular programmes such as Rivals, Heartstopper, Nobody Wants This and Agatha All Along continued to encourage Brits to spend evenings indoors.

Belts tighten on dining in and out

In order to prioritise the things they love, cost-savvy Brits are still looking for ways to keep their budgets in check. Just under half (46 per cent) plan to cut down on discretionary spending to save money, albeit a marginal decrease compared to September (49 per cent). This group listed eating out at restaurants (50 per cent), ordering fast food and takeaways (50 per cent) and drinking at pubs, bars and clubs (41 per cent) among their top cutbacks.

In October, spending on takeaways and fast food was flat, at 0.0 per cent, down from last month’s 0.8 per cent growth. Spend at bars, pubs and clubs also plateaued (0.0 per cent), representing the lowest growth for the category since September 2022 (-0.5 per cent).

‘Fun funds’ and 2025 getaways

Alongside spending on retail and entertainment, two fifths (46 per cent) of consumers say there are treats and luxury purchases they continue to buy because they bring them joy, even when trying to budget, allocating on average £133 each month to these items. Sweets and pastries are still top of the treat list, chosen by 43 per cent, while 25 per cent say they continue to spend on both takeaway coffees and new clothes and accessories respectively.

Travel remains popular, up 6.7 per cent, largely owing to growth at airlines (9.3 per cent), as Brits book getaways abroad. The strong demand for travel was also highlighted by holidays ranking #1 in a list of discretionary spending priorities, chosen by 22 per cent of respondents. Three in 10 consumers (28 per cent) have already booked a getaway for 2025, with almost a quarter (23 per cent) of these holidaymakers booking early to save money, while one in three (31 per cent) will be visiting a new destination they’ve not been to before.

While still in growth, spending at travel agents fell slightly from September (7.8 per cent, compared with 9.2 per cent), possibly indicating that holidaymakers are taking a more hands-on approach to travel next year.