Consumer spending grew +1.8% YOY in December, the lowest rate of growth seen since March 2016 – according to data from Barclaycard, which says that, with inflation at 2.3%, this performance equated to a contraction in real terms.
The data shows that 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, rising by a modest +2.0%. This figure, however, was boosted by strong growth in pubs and restaurants.
The high street, on the other hand, continued to face challenges despite the festive season – department store expenditure declined by -6.3%, and spending in the sector remained subdued as shoppers cut back on clothing and balanced out their budgets.
In the face of numerous reports of store closures and the challenges facing well-known high street brands, over half of Brits (52%) say they want to support their local high street. Furthermore, 38% say they are deliberately choosing the high street over online-only retailers.
Despite these good intentions to support local economies, many remain concerned about spending power. One in two consumers (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.
In terms of the wider picture, one in two UK adults are concerned that there may be a decline in the UK economy – up from 43% last year.
Many shoppers are anticipating price increases over the next three months.