Despite positive reports on the UK economy, consumer spending flatlined in February, financial services provider Barclays reported on Monday.
According to the bank’s Retail and Business Banking arm Barclaycard, which processes nearly half of all the UK’s debit and credit transactions, consumer spending rose by just 2% year on year. This continued trend of muted growth was said to have begun in the third quarter of 2013. Wage growth also remains sluggish, despite a six year high in consumer confidence and recent falls in unemployment, which have had a direct impact on consumer spending.
Barclaycard’s spending data is based on transactions from its UK credit card business, UK payment acceptance business and spending on Barclays debit cards. The figures show that essential spend by UK consumers has fallen, with supermarket spend down by 0.8%, while spending on petrol was down by 6% and number of transactions down by 2.8%.
A boost to the UK housing market has resulted in higher DIY spend, which increased by 11.3%. Online spending also grew, with a rise of 8.6% year on year in February. However, with no growth at all instore, high street spend was stagnant.
Consumer spending in restaurants and on clothing continued to perform well, with spend up 10.8% and 5.8% year on year respectively.
The average spend for each transaction fell 3.9% on last year and 5.4% on 2012. This is reportedly a legacy of the economic downturn which has led to shoppers seeking to save money, as well as expecting value for money on their purchases.
CEO Barclaycard, Val Soranno Keating, commented:
“The positive noises on the economy and unemployment have yet to drive significant increases in consumer spend. While consumers feel more confident than they have for several years, the upswing in spending growth that we saw in the middle of last year has slowed as pay packets are not matching the performance of the wider economy. Until we see stronger wage growth, spending will likely continue to be muted.”