Barclays: September spending rises 2% as fuel costs climb

UK consumer card spending rose 2% in September, with a 17.3% increase in fuel expenditure helping drive growth, according to Barclays’ Consumer Spend report. The overall increase slowed from August’s 2.1% and remained below the latest CPIH inflation rate of 3.3%.

Warm weather supported spending on meals, drinks and leisure, but the gains were uneven across retailers. Clothing and supermarket expenditure declined, while concerns about the Autumn Budget prompted some consumers to curb discretionary spending and postpone larger purchases.

What happened

Essential spending increased by 2.5%, outpacing the 1.8% rise in non-essential expenditure. Higher diesel prices contributed to the sharp increase in fuel spending, meaning part of the headline growth reflected more expensive necessities rather than greater scope for optional purchases.

Hospitality and leisure spending rose by 2.7% as September’s warmer conditions sustained demand for eating and drinking out. The figures, reported by InternetRetailing, showed businesses benefiting from the weather even as overall spending growth eased.

Food and drink specialists recorded a 6.3% increase, contrasting with a 0.8% decline at supermarkets. That split left the two food retail categories with markedly different results despite operating within the same household spending market.

Clothing expenditure fell by 1.3%, although transaction numbers increased by 3.8%. With shoppers making more transactions but spending less overall, the figures point to a lower average amount spent per transaction rather than a straightforward reduction in purchasing activity.

General retail spending increased by 3.6%, while specialist retailers, including beauty, pharmacy and sports businesses, recorded growth of 2.6%. Household and DIY spending rose more modestly, by 1.2%.

The background

Confidence in household finances stood at 67%, the highest reading of the year so far. That improvement did not extend equally to employment: confidence in job security remained considerably lower, at 45%.

The proportion confident in their ability to live within their means reached 73%, with the report recording a 2% month-on-month increase. This measure concerns consumers’ ability to manage their budgets, rather than their assessment of the wider economy.

Economic confidence was much weaker at 26%, compared with 30% in June, the strongest month of the year. Barclays said the measure had otherwise been fairly steady, with only small monthly movements. The broader outlook is also examined in the forecast for a 0.1% contraction in the UK economy ahead of the Budget.

The comparison with CPIH adds an important qualification to September’s card figures: expenditure increased, but at a slower rate than the inflation benchmark cited in the report. The release does not provide an inflation-adjusted spending figure, so the 2% rise should not be treated as a measure of growth in purchasing volumes.

For retailers, the divergence between clothing, supermarkets and specialist food sellers also limits the usefulness of the headline number as a guide to individual trading conditions. Separate analysis of European retail distress by Weil examines the financial pressure facing the sector.

What people are saying

Rohan Kumar, head of spend insights at Barclays, described September as a month of continued spending growth across both essential and non-essential categories. He highlighted stronger confidence in household finances alongside the support that warmer weather provided to hospitality and leisure.

Kumar also pointed to an increase in digital subscriptions, suggesting consumers were combining social occasions with entertainment at home as autumn approached. The source did not give a percentage increase for subscription spending.

His assessment was that uncertainty before the Budget was keeping value and cautious purchasing decisions central to consumer behaviour. The report’s survey findings put numbers against that concern: 68% of consumers were worried about the potential effect of the Autumn Budget on their household finances, while 61% were concerned about possible tax changes.

What happens next

Budget concerns were already influencing spending plans, rather than remaining a general expression of uncertainty. Some 30% of consumers said they were reducing non-essential expenditure, creating a constraint for businesses reliant on purchases beyond household necessities.

A further reported finding was that 27% were delaying major purchases and important financial decisions. For businesses selling higher-value goods, that points to uncertainty over when customers will commit, not just how much they will spend.

Retailers therefore enter the final quarter with evidence of both continued demand and greater selectivity. For owners reviewing business overhead costs, the distinction between rising sales values and stronger underlying purchasing activity is particularly relevant when assessing September’s performance.

The findings do not establish whether delayed purchases will resume after the Budget. They record consumers’ current intentions, leaving the timing and scale of any subsequent release of spending unresolved.