Economy

Household budgets continue to tighten amid rising inflation

Spending on utilities jumped 39.6% year-on-year, representing a 5.1% increase month-on-month (34.5% in May), and leading 44% of Brits to cut back on their energy and water consumption to keep costs down

Data from Barclaycard has revealed that spending on essential items increased 4.4%, which has been largely driven by a surge in fuel spend (up 24.8%) as petrol and diesel prices continued to climb.

However, shopping at supermarkets and specialist food and drink stores saw year-on-year decreases of 0.8% and 1.1% respectively, with almost half of consumers (49%) seeking more value from their weekly shop (41%).

As household bills continue to mount, spending on utilities jumped 39.6% year-on-year, representing a 5.1% increase month-on-month (34.5% in May), and leading 44% of Brits to cut back on their energy and water consumption to keep costs down.

Spending on non-essential items was up 7.1% year-on-year, although this was a noticeably lower level of growth than seen in May (11.6%) and April (21.2%), continuing the downward trend seen over the last few months.

However, despite widespread budgeting, several categories are reportedly performing well month-on-month. The entertainment industry is said to have benefited from blockbuster bookings at the cinema, as Brits flocked to see Top Gun: Maverick and Jurassic World Dominion, resulting in a 5.3% boost compared to May 2022.

At home however, digital and content subscriptions saw a decline (down 4.2%) compared to May 2022, as Brits prioritised their spending elsewhere. This comes as a quarter (26%) are reviewing their subscriptions and cancelling ones they can live without, with 44% of those making changes to their subscriptions choosing to switch off or make cuts to their film or TV streaming services.

José Carvalho, head of consumer products at Barclaycard, said: “The continued rise in fuel, food and energy prices means consumers are having to budget and seek out value where they can for both essential and non-essential purchases.

“While this cautionary approach is impacting supermarket and individual basket spend, there are bright spots to be found, with Brits increasing their discretionary spending on entertainment, travel and takeaways as we head into high summer.”

Jasmine Birtles, a financial expert, added: “Brits are understandably worried about their financial futures and, in particular, their ability to pay ever-rising bills. However, it looks like many have been able to put their concerns aside for a while and enjoy the good weather, with sports items and summer clothes performing well.

“The hospitality and entertainment sectors have had a tough few years, with lockdowns and now rising inflation, so it’s heartening to see that, for the moment at least, people are going out to eat and enjoying cinema shows again.”

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