Cost of living: Consumer spending rises 3.5% but Britons continue to cut back ahead of Christmas, report finds
by 0 
by 0 Consumer spending rose 3.5% in October but the hospitality and leisure industries continue to struggle as Britons cut back ahead of Christmas, a report found.
Figures from Barclaycard – which sees nearly half of the nation’s credit and debit card transactions – also show spending on utilities has slowed as households begin receiving discounts from the government’s Energy Bills Support Scheme.
A £400 discount, administered by energy suppliers, is being paid to consumers over the course of six months. It started in October and will end in March.
Spending on essential items, such as fuel and groceries, increased 5.7% year on year, steeper than September’s growth (3.3%), reflecting the impact of rising inflation, according to the report.
As petrol and diesel prices started to creep up again, fuel spend rose 17.7% year on year – 6.6 percentage points higher than last month’s uplift (11.1%).
Public transport saw its smallest rise since March 2021.
This muted growth was likely due to the rail strike action in October, as well as office workers choosing to cut back on commuting and work from home more in a bid to save money.
Wonky vegetables
Supermarket shopping grew 4.6% – 1.8 percentage points higher than last month as the cost of food continued to rise.
Two-thirds of Britons said they are now looking for more ways to get better value from their weekly shop, with almost half of these shoppers paying closer attention to the prices of items they buy regularly.
More than four in 10 are opting for cheaper “wonky” vegetables, and one in four is only buying items that are discounted or on offer. A further 13% are even growing their own produce at home to save money.
Pharmacy, health and beauty stores were a bright spot, growing 3.8% in October – considerably higher than last month (0.8%) – suggesting that image-conscious consumers are still keen to purchase items such as make-up and toiletries, even while spending more nights in.
Spending more time at home
Spending on home improvements and DIY, which has recently seen a downward trend following a boom in the pandemic, also saw improvement in October, with its smallest decline (-1.2%) in eight months. It is a possible sign the public is spending more time and money sprucing up their homes in preparation for the winter months.
The hospitality and leisure sector grew 10.2%, however this was the smallest uplift for the category since March 2021, possibly due to the impact of rail strikes as well as rising living costs.
Read more cost of living stories
Air fryer sales rocket by 3,000% as consumers seek to slash energy costs
Business secretary hints at autumn budget windfall tax expansion
Why you’ll likely see more money in your pay packet this month
In fact, of the half of Brits (52%) who are cutting back on discretionary purchases to afford their energy bills this autumn and winter, six in 10 (62%) say they are spending less on eating out at restaurants and 37% are buying fewer cinema tickets.
Restaurants contracted -11.3% and entertainment slipped back into decline (-1.0%) in October.
Bars, pubs and clubs saw a slight improvement, with growth of 1.7% – however, prior to September, this would have been the smallest growth for the category since March last year.
Cutting back on Christmas
With the festive season fast approaching, almost half (48%) of Brits are planning to cut down on Christmas purchases, including festive activities and gifts, to save money this year.
Of these consumers, six in 10 will be spending less on gifts for family and friends, 44% will cut back on festive food and drink, including turkey and mulled wine, and two-fifths will curb their spending on Christmas parties and socialising.
In addition, a fifth of Brits plan to set a spending limit with their friends and family for gift purchases and a similar proportion started their Christmas shopping earlier this year to spread the cost.
One in 10 thrifty shoppers even plan to buy more second-hand/pre-loved items to give as presents this year.
Esme Harwood, director at Barclaycard, said: “Rising petrol and supermarket costs continue to bite, but Brits are spending less on energy bills as government support kicks in and people find ways to economise at home.
Click to subscribe to the Sky News Daily wherever you get your podcasts
“Consumers continue to swap big nights out for cosy evenings in as they reduce their discretionary spending, while health & beauty and home improvements enjoy a little boost.
“With the festive season around the corner, we’re likely to see further cutbacks, as Brits reign in their Christmas spending. Consumers are adopting a restrained approach to festivities, reaching for pre-loved gifts and setting spending limits to manage their costs during this traditionally expensive time of year.”
