Barclays: Cost of Living Concerns Hit Consumer Card Spending

• Essential spend grew 0.5 per cent, led by a 1.6 per cent increase in fuel spending – the category’s first uplift since February 2023
  
  
• Clothing (up 3.6 per cent) and entertainment (up 3.5 per cent) performed strongly, despite an overall slowdown in non-essential growth
  
  
• Travel declined -3.3 per cent, as trips abroad were delayed or swapped for staycations
  
  
• The majority of UK adults remain confident in their household finances (67 per cent) and ability to live within their means (71 per cent)
  
  
• In response to current tensions, 14 per cent report delaying major purchases or building up a savings buffer in case costs climb
  
  
• The Barclays Consumer Spend report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending

Consumer card spending increased 0.9 per cent year-on-year in March, down from February (1.0 per cent) and less than the latest CPIH inflation rate of 3.4 per cent. Essential spending returned to growth (up 0.5 per cent) for the first time since July 2025 (0.3 per cent) as fuel prices surged, while discretionary spend growth slowed to 1.1 per cent, with travel in decline (-3.3 per cent) for the first time since 2021.

While confidence in the UK and global economies have been impacted by recent events (down from 25 per cent and 24 per cent in February to 21 per each in March), overall consumer resilience remains strong. The majority of UK adults report feeling confident in their ability to live within their means each month (71 per cent) and in their household finances (67 per cent).

In response to uncertainty around the Middle East conflict, one in seven (14 per cent) say they are delaying major purchases or financial decisions, while the same proportion are building up a savings buffer in case costs rise. Meanwhile, 74 per cent anticipate ongoing tensions will continue to impact the cost of living throughout the rest of year.

Travel sees first decline since COVID 

After five years of consistent growth, travel spending fell -3.3 per cent, its first drop since March 2021, before COVID-19 travel restrictions lifted. Within the category, travel agents (-4.6 per cent), airlines (-4.1 per cent) and public transport (-2.9 per cent) all declined. This comes as the majority cite concerns about rising travel costs (70 per cent) and potential disruption (57 per cent), while 11 per cent say they’re cancelling intended travel plans.

Spend on hotels, resorts & accommodation increased 1.2 per cent, potentially due to a preference for UK-based “staycations” and a rise in domestic bookings during the Easter break.

Clothing, beauty and entertainment show resilience 

Non‑essential spending growth slowed to 1.1 per cent in March, but momentum held up in several categories. Digital content and subscriptions rose 10.9 per cent, while health and beauty grew by 6.3 per cent. Overall retail spending increased modestly by 1.6 per cent, led by a standout month for clothing, up 3.6 per cent – its strongest increase since July 2025 (5.2 per cent). General retailers and marketplaces recorded growth of 4.4 per cent, with specialist retailers outperforming at 5.0 per cent. 

Entertainment extended its run of growth for the 19^th consecutive month, rising 3.5 per cent as transaction volumes increased 7.2 per cent. Cinema spending was up 5.5 per cent, boosted by the box office success of Project Hail Mary and family release Hoppers. 

Against a backdrop of wider cost pressures, essential spending edged up 0.5 per cent – its first increase since July 2025 (0.3 per cent). This was largely driven by a 1.6 per cent rise in fuel spending, the category’s first increase since February 2023 (5.2 per cent). Spending jumped 10.9 per cent year‑on‑year in the week commencing 28 February as drivers filled up ahead of price rises, but the peak quickly tailed off, with spending returning to last year’s levels throughout March. 

Jack Meaning, Chief UK Economist at Barclays, said: “Shoppers delaying major purchases and building up a savings buffer in response to the shock from the Middle East reinforces our view that activity will be muted in the coming months. With an interest rate decision due in less than three weeks’ time, the Bank of England will need to consider how to balance this softening economy with the inflation already taking effect. Our modelling suggests this balance is best struck by holding rates, containing the worst of inflation without unduly squeezing consumers.” 

Karen Johnson, Head of Retail at Barclays, said: “March’s figures may highlight some differences between how consumers feel and how they actually spend. Cost-of-living concerns and economic uncertainty continue to weigh on confidence, prompting caution and a desire to cut back, but spending remains resilient across several categories, namely clothing, entertainment and digital content & subscriptions. Many are once again carefully managing their money while finding ways to prioritise the things that matter the most to them – an ongoing balancing act.” 

Overall growth figures

Source : Barclays

Image : Tero Vesalainen / Shutterstock / 1032154933

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