Card spending falls for first time since February 2021

Card spending dropped by 0.6% year-on-year in June, which is the first decline in this figure since February 2021, Barclays has revealed.

The bank’s consumer spending report found that this figure is "significantly lower" than the latest CPIH inflation rate figure of 2.8%, with the colder weather early in the month seen as the reason for this decline in spending.

Supermarket spending also fell for the first time in two years, dropping by 2.6%, as two thirds (65%) of consumers said they are cutting back on their weekly grocery spending, with over half (52%) of these shoppers looking out for loyalty scheme discounts and deals.

Barclays added that this slowdown can also be attributed to the drop in food price inflation, which has fallen to its lowest level since October 2021 at 1.7%, with over a third (36%) of shoppers saying they have noticed food prices have been rising at a slower rate in recent months.

Furthermore, consumers have said they feel more optimistic about their ability to live within their means (73%) and spend more on non-essential items (56%).

Despite this, concerns surrounding inflation only dropped by one percentage point year-on-year, to 85%.

Head of retail at Barclays, Karen Johnson, said: "Our data demonstrates the undeniable impact that unseasonable weather can have on consumer spending. The sluggish demand at the start of June even caused some fashion brands to adjust their sales schedules, although I was pleased to see that the situation has since improved with the arrival of sunnier days.

"However, the dreariness didn’t dampen spending across the board, with takeaways, digital content and entertainment all benefitting from people sheltering at home, and hopefully we’ll see sustained interest in The Euros – regardless of England’s fate – and sunnier weather driving people to their local in July."

Chief UK economist at Barclays, Jack Meaning, added: "While June’s data suggests a weak month, the view looking ahead to the second half of the year, as we see it, is one of falling interest rates, growing real incomes, and increasing confidence among consumers to spend and businesses to invest, particularly now that the uncertainty of the general election is out of the way."

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