LONDON (Reuters) – British consumer spending saw minimal growth last month as concerns over finance minister Rachel Reeves’ Oct. 30 budget and higher energy costs kept shoppers cautious, a survey revealed on Tuesday. UK consumer spending reflected this shift in priorities, as essential purchases took precedence over discretionary items. #UKConsumerSpending
The British Retail Consortium reported that store spending rose 0.6% year-on-year in October, down from 2.0% in September and marking the slowest increase since July.
Meanwhile, additional data from Barclays reflected similarly modest growth in consumer spending for October.
“Speculation about the impact of the budget, a holding back of demand until Black Friday promotions and a later half-term break all impacted retail sales data,” said Linda Ellett, UK head of consumer, retail & leisure at accountants KPMG who sponsor the BRC’s data.
“With clarity now provided by the budget and many households escaping paying increased tax from their wages, retailers will be hoping for an upturn in consumer confidence and spending.”
Most of the recent tax hikes announced by Reeves last week primarily targeted businesses.
However, households also felt the impact, facing a 10% rise in a regulated price cap on energy last month.
According to Barclays’ report, debit and credit card spending grew by 0.7% in October year-on-year, the slowest since July and down from a 1.2% increase in September.
Spending on essential items dropped by 2.2%, marking the largest decline since April 2020, with supermarkets leading the decrease. Non-essential spending rose by 2.1%, mainly due to ticket sales for concerts by artists like Coldplay.
Barclays’ survey revealed that concerns about food inflation eased, and households felt more optimistic about discretionary spending. #UKConsumerSpending
“With price pressures continuing to ease and tentative signs that consumer confidence is improving once again, following what appears to have been a post-election dip, we think that the stage is set for real spend growth,” Jack Meaning, chief UK economist at Barclays, said.
Adapting to Shifting Consumer Trends Amid Spending Challenges
Moreover, despite these challenges, some areas experienced growth. Notably, non-essential spending saw a rise due to events and entertainment. Nevertheless, overall, UK consumer spending trends highlight the need for retailers to adapt to changing consumer behavior.
