Consumer spending sees ‘sharpest’ fall at 16.3% in January

Consumer spending fell 16.3% in January, the “sharpest” decline since May 2020 which was attributed to the current lockdown restrictions and Covid-19 pandemic.

The data was gathered from the Barclaycard report which combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending.

The report found that spending on non-essentials dropped 24.2%, with more shops closed due to ongoing restrictions, while hospitality and travel had another challenging month.

Meanwhile spending on essential items grew 3.9% year-on-year, with high demand for home deliveries driving a surge of 126.8% in online supermarket spend.

Ordering takeaways reached a record high, up 32.%, and online retail remained strong with a 73.2% rise.

Online supermarket spending by the over 65s has grown much faster than other age groups, more than quadrupling (332.5% compared with last year. Barclays suggests one likely reason is that Brits recognise the “scarcity of delivery slots”, and the fact that older and more vulnerable people are relying more heavily on online grocery shopping, with nearly six in 10 (57%) saying that they would rather visit the supermarket in person to avoid taking a slot from someone who needs it more.

Fuel, however, saw its sharpest decline (32.3%) since June 2020 (33.8%) – when measures from the first national lockdown were still in place – as petrol prices continued to fall and more Brits stayed at home.

The hospitality sector had another very challenging month with bars, pubs, and restaurants recording significant declines of 93.7% and 84.2% respectively.

Raheel Ahmed, head of consumer products, said: “As the impact of the latest lockdown starts to take its toll, we’ve seen particular sectors struggle, as physical premises across the UK were forced to close. Last month’s glimmer of hope for the travel sector also seems to have stalled as tougher border controls saw bookings drop.

“Yet, on a more positive note, we have seen a surge in many online categories as the demand for home deliveries continues to rise. From meal kits and subscription services, to online grocery shopping, Brits have continued habits they formed in the first lockdown, with a record high seen in spending on takeaways and fast food.”

He added: “While confidence in job security has reached its lowest point in over a year, the ongoing vaccine rollout means that Brits believe there is hope on the horizon, and we all look forward to being reunited with much-missed family and friends later in the year.”