While the United Kingdom saw a rise in consumer spending in November, the growth rate lagged behind the inflation ratio, underscoring the strain on household finances ahead of Christmas, according to surveys conducted by Barclaycard, a credit card company based in the United Kingdom.
In contrast to the annual increase in consumer prices of 11.1% in October, which was the highest figure in 41 years, Barclaycard said that spending on its credit and debit cards increased by 3.9% year over year in November.
Some 94% of Britons surveyed by Barclaycard expressed concern about how rising household energy costs would affect their personal budget.
“Cutbacks are affecting non-essential spending on clothing, department stores, and restaurants. Many Brits intend to reduce festive spending on presents and parties in an effort to save money,” said Esme Harwood, director at Barclaycard.
Separate data from the British Retail Consortium (BRC), which only included data on in-store purchases, revealed a 4.2% annual gain in sales following an increase of 1.6% in October, which was mostly driven by food purchases.
BRC chief executive Helen Dickinson said, “Sales picked up as Black Friday discounting marked the beginning of the festive shopping season. However, sales growth remained far below current inflation, suggesting volumes continued to be down on last year.”
The biggest grocery chain in the United Kingdom, Tesco, reported last month that consumers shopping for “reduced to clear” food has sharply increased as a result of the country’s increasing cost-of-living crisis.
The company’s financial statement, ending 27 November 2022, reveals its customer count increased by 8% for clothing and 13% for homes. This is despite its non-food sales being down by 6%.
GlobalData apparel analyst Louise Delglise-Favre says that the rise in customers across clothing and footwear can be indicative of a switch from consumers to more affordable options amid the cost of living crisis.
Louise Delglise-Favre said, “Consumers might be trading down to cheaper alternatives due to their discretionary income being increasingly squeezed by inflation, mortgage payments, and rising energy bills.”
A Trade Union Congress (TUC) report says that prices of staples such as a turkey, pigs in blankets, carrots, and roasts rose by an average of 18% since 2021, while wages had gone up by only 5.7%.
Even the government’s inflation data supports the TUC report. cranberry sauce and bread sauce values have gone up by 33% in a year.
The only good news is in the form of British retailers benefitting from Black Friday discount sales in November, as consumers went after accessories such as winter coats, hot water bottles, and hooded blankets.
As per the latest British Retail Consortium (BRC) data, total consumer goods sales rose by 4.2% in November 2022, compared to its corresponding 2021 figures.