Source: Sharecast
According to research by Barclays, spending returned to growth, with the total value up 0.8% year-on-year, following April’s 0.1% decline. Transaction growth - which refers to the number of card transactions - eased 0.4%.
Within that, essential spending rose 0.7%, driven by an 11.9% surge in fuel spending. But non-essential spending also returned to growth, up 0.9% from April’s 0.3% fall. Entertainment spending rose 5.8%, which Barclays said was supported by a clutch of popular cinema releases and strong demand for digital content, including the UEFA Champions League and the second season of Rivals on Disney+.
The increase in spending coincided with an uplift in confidence in the UK economy, which rose to 25% from 22%. Confidence in the European and global economies also strengthened.
Consumers’ confidence in their household finances and ability to live within their means improved modestly, up one percentage point each at 65% and 70% respectively.
However, travel spending slid 5.8%, the third consecutive month of decline, as war in the Middle East prompted holidaymakers to pause plans. Concerns about the impact of the war on costs also remain high. A total of 83% are concerned about rising energy bills, and 82% about food prices, compared to 85% and 84% respectively in April. Around 65% are also making financial adjustments in response to the current uncertainty, with this group limiting non-essential purchases, Barclays noted.
Karen Johnson, head of retail at Barclays, said: "The warmer weather and first May bank holiday gave consumers more reason to spend, particularly on seasonal essentials, UK breaks and affordable ways to enjoy time with family and friends.
"Shoppers are still being careful, with many continuing to build savings and managing subscriptions more closely, but they are also finding room in their budgets for the things that feel good value, convenient or worth prioritising."
Julie Lafargue, chief market strategist at Barclays Private Bank and Wealth Management, said: "May’s data offer an early sign that household demand may be stabilising, but the macro backdrop remains finely balanced. The key question now is whether improving confidence can be sustained, particularly if inflation remains sticky and interest rates trend higher."
Barclays analysed spending on its debit cards and Barclaycard credit cards between 27 April and 22 May. It also surveyed 2,000 respondents through Opinium Research between 22 and 26 May.