Consumer spending growth slowed to 3.0 per cent year-on-year in August as the poor summer weather led to more Britons heading abroad, impacting spending at home, according to the latest data from Barclaycard, which processes nearly half of all credit and debit card transactions in the UK.
Spending growth fell below the 4 per cent mark for only the second time this year, as the country was hit by above-average rainfall and below-average temperatures that made it the coldest August for three years.
Whilst this led to an up-tick in travel spend, which grew 7 per cent on last year, it dragged down spending growth more generally. In-store spend grew by just 0.3 per cent in the month, down sharply on the 1.7 per cent average seen so far this year and the 2.6 per cent increase in August 2014.
Growth in travel spend
The strong growth in travel spend continued an above-average performance with growth of 8.1 per cent this summer, more than double the 3.2 per cent seen over the same period last year.
Last summer, growth in spending on travel – which includes holidays, airlines and hotels – peaked at 5.3 per cent in August, but a doubling in travel-related transactions from last summer to this led to growth of 10.3 per cent in June, 6.9 per cent in July and 7.0 per cent last month.
A surge in last-minute travel has seen consumers supplement their already-booked breaks with additional shorter trips to escape the British washout. These often-shorter, and therefore cheaper, trips have led to a 15.3 per cent fall in the average transaction value for travel spend this summer.
Hotels
The number of hotel transactions was 10.5 per cent higher in August, and is up 11.4 per cent over the past three months. Overall spend growth on hotels dipped to 6.5 per cent over the summer – down 0.5 percentage points on last year – thanks to a 4.3 per cent fall in average spend levels, as shorter stays and last-minute deals brought down individual transaction levels.
Restaurants
Despite the weather, restaurants continued to perform strongly, with growth of 13.3 per cent. Pubs performed particularly well with spending up 12.8 per cent. Transaction volumes in pubs are 19.3 per cent higher this summer, but the amount spent per transaction is down 5.4 per cent, implying that – with no fall in prices – that more visits are being made but for smaller rounds.
Takeaway spend also maintained its high level of growth throughout the month, averaging 50.2 per cent in August – building on the growth of 52.7 per cent seen in July when, across the UK, rainfall was a third higher than normal.
Indian Summer to come?
Chris Wood, Chief Operating Officer at Barclaycard said:
“Even accounting for seasonal fluctuations August saw weaker than expected growth in consumer spending at home, as households countered another typically wet and cold British August by heading abroad.
“Restaurants, supermarkets, clothing stores and household stores all saw lower levels of transactions compared to last year, though department stores and pubs benefitted as consumers retreated indoors to avoid getting wet.
“With the country forecast to experience an Indian Summer this month, it’ll be interesting to see whether spending levels recover.”
Barclaycard processes nearly half of all card transactions in the UK. Our spending data is based on transactions from our UK credit card business, UK payment acceptance business and spending on Barclays debit cards.
For more information click here
htm sponsor hotel information at H&C News