Card spending declines in July, despite Euros final and holidays boosting pubs and travel

Consumer card spending fell -0.3% year-on-year in July – a slight improvement on June (-0.6%) but noticeably lower than the latest CPIH inflation rate of 2.8% – as the mixed weather across the month, combined with Brits’ selective discretionary spending, continued to pose challenges for retailers. However the final stages of Euro 2024 boosted pub sales, while travel spending remained resilient as holidaymakers paid off the last of their monthly instalments.

Spending on non-essential items saw further decline in July (-0.7%) compared to June (-0.5%), with 48% of Brits making the effort to cut down on discretionary spending (up from 46% last month). This comes as one in four (23%) say they have participated in or would consider a ‘no-spend challenge’, where they refrain from making non-essential purchases, such as takeaways, coffees and clothes, but still spend on essentials, such as food, childcare and utilities.

After the unseasonably wet start to July, the arrival of warmer days and belated summer sales did result in a modest recovery for retail. The sector was down just -1.1%, compared to a dip of -2.6% in June, buoyed by a 6.4% uplift in spending on health & beauty. Clothes shopping fell -2.3%, but this represented a considerable improvement on June’s -7.7% decline.

Two in five (39%) say July’s rainy weather led them to cut-back on “summer spending”. The average Brit reduced their outgoings by £133.40, with 18-34 year-olds cutting back the most, at £158.40. This looks to have impacted both home improvements & DIY (-7.5%) and sports & outdoor (-7.9%), which contracted considerably, marking 13 months of decline for both categories.

A win for hospitality & leisure

Pubs, bars and clubs saw an uplift of 4.9% in July – the category’s highest growth since January – as football fans flocked to their local to watch the final rounds of the Euro 2024 tournament. Despite England’s loss, the final against Spain led to payment transactions almost tripling at pubs and bars on 14 July, increasing by 195.6% year-on-year. This also marked the busiest Sunday of the year for pubs, with transaction volumes up 92.9% compared to the average Sunday in 2024.

Entertainment’s 2023 triumph is a tough act to follow

Entertainment spending was down -6.1% year-on-year, marking its greatest decrease since March 2021. This can be attributed to particularly strong growth for entertainment during the same period last year, at 15.8%.

Cinema spending was down -18.6% year-on-year, owing to the Barbenheimer boom of July 2023, which saw cinema sales increase 67% versus the 2023 average.

Similarly, spending on live shows and concerts decreased -17.9% overall in the month, with last year’s figures inflated by the release of Taylor Swift’s Eras Tour tickets. However spend did spike during the sales of Cyndi Lauper and Dua Lipa’s tours respectively, after both stars performed in front of huge crowds at Glastonbury.

Encouragingly, consumers continue to spend on experiences, with travel up 4.3% – on par with June’s growth. Travel agents saw a higher increase of 6.6% year-on-year, as holidaymakers settled final costs for their summer getaways.

Streaming soars but ‘streamflation’ concerns continue

Digital content and subscriptions performed well once again, enjoying an 11.1% rise in July, up from 9.2%  in June, as Brits tuned into popular series such as House of the Dragon, The Boys and Supacell. ‘Streamflation’ – the rising price of streaming subscriptions – also continued to have an impact, with three in five (60%) consumers concerned about digital content and subscriptions becoming more costly.

On the other hand, fast food and takeaways saw muted growth compared to June, increasing  just 2.2%. Of the 48% planning to limit discretionary expenditure, almost half (47%) are cutting back on ordering takeaways.

Supermarket shopping slows, but BBQ spending sizzles

Essential spending returned to growth in July (0.6%) after declining last month (-0.9%). This was largely driven by spending at food and drink specialists such as butchers and greengrocers, which saw their highest uplift (3.5%) since January – a sign that the handful of sunnier days in July encouraged Brits to buy BBQ ingredients to cook at home.

In contrast, growth at supermarkets remained flat year-on-year (0.0%), though this was an improvement on June (-2.5%). Shoppers remain discerning when doing the weekly shop, as the majority (63%) continue to look for ways to cut back on grocery spending. Of those seeking savings half (47%) are looking out for loyalty scheme discounts and deals, and buying budget, own-brand, on-offer or discounted products (all 45%). As further evidence of cost-conscious behaviour, 37% say coffee and drink subscriptions no longer offer the same value for money that they used to.

Economic confidence climbs, but Brits’ confidence in personal finances dips

Confidence in the UK economy improved by five percentage points in July, rising to 32% – the highest level since February 2022. However Brits’ confidence in their household finances and ability to live within their means both declined, at 65% (down two percentage point) and 70% (down three percentage points) respectively. Following news in July that water bills will rise by almost £100 over the next five years, a third of Brits (32%) said they were very concerned about the negative impact that this would have.

Karen Johnson, head of retail at Barclays, said: “Shoppers and retailers alike will be ready to see the end of the summer showers. It’s encouraging to see seasonal staples such as BBQ supplies, beauty buys and holiday planning delivering signals of steady recovery.

“Despite England losing in the nail-biting final of the Euros, UK hospitality emerged as a true winner, when the Euros delivered a boost for pubs, bars and clubs. With the final days of the Olympics in Paris, Taylor Swift’s return to a sold-out Wembley Stadium for her final UK Eras Tour dates, and a heatwave on the cards, we hope summer spending will finish strongly in August.”

Jack Meaning, chief UK economist at Barclays, said: ”While weather, sports events and concerts all look to have resulted in seasonal fluctuations, the bigger picture is that consumers are seeing their incomes and spending power rise and are becoming more confident in the overall economic outlook. This, coupled with the fact that the Bank of England has begun to reduce interest rates, should translate into stronger underlying spending growth, as we move through the second half of this year and into 2025.”

Overall growth figures