Consumer spending grew 1.8% year-on-year in December, the lowest rate of growth seen since March 2016. With inflation at 2.3%, this equated to a contraction in real terms.
Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, revealed essential spending growth dipped to just 0.6% – the lowest figure recorded since July 2016 – caused by a contraction in supermarket spending of 1.1%.
Non-essential expenditure saw a muted month, rose by just 2%, but this was boosted by strong growth in pubs and restaurants. Pubs saw an increase of 12.9% whilst restaurants were at 9.1%.
Amidst recent high street struggles, 52% of respondents said they wanted to support their local high street. Despite this, many remain concerned about their spending power. Some 49% expect to cut back in January to cover the cost of Christmas, while 48% say they feel less confident about their personal finances in the coming year than they have done for many years.
Furthermore, 50% of UK adults said they were concerned that there may be a decline in the UK economy – up from 43% last year.
Esme Harwood, director at Barclaycard, said: “Growth in consumer spending dropped to its lowest level since 2016 and represents a decline in real terms. Many Brits were more modest in their approach to Christmas spending compared to 2017, cutting back on the essentials to balance the costs of the festive season.
“Despite a desire to support their local high street, Brits expect to cut back in January and remain cautious amidst ongoing economic uncertainty.”