• UK consumer spend in March up just 1.1 per cent year on year, below the rate of inflation for the first time in six months
• On-going sluggish wage growth, higher household bills and more people entering onto or stepping up the property ladder continues trend of muted growth that began in Q3 2013

Growth in UK consumer spending slowed to its lowest level for 14 months in March rising just 1.1 per cent compared to last year, according to the latest monthly update from Barclaycard, which processes nearly half of all the UK's debit and credit card transactions.

Despite improving employment figures, growth fell below the rate of inflation for the first time in six months as household budgets continue to be squeezed by wage growth failing to keep pace with rising household costs.

Spending was also impacted by a robust comparator last year due to the strong sales leading up to an earlier Easter.

Although inflation has fallen to 1.7 per cent, household bills are up by over 3 per cent and wage growth is stuck at around 1.4 per cent, leaving consumers with little choice but to cut back on discretionary spending to balance the books.

They are continuing to resist the temptation of the high street and are instead going online to get the best deals, leaving in-store hardest hit - down 0.3 per cent, its lowest level of growth since January last year and especially weak given the country was gripped by freezing temperatures in March last year, which discouraged people from venturing out.

Online growth continued to outpace the high street, albeit at its slowest rate since the end of 2011, showing growth of 6.4 per cent.

Category spend

'Essential' spending, such as grocery and supermarket shopping and petrol, fell 5.2 per cent on last year, as the average value of each grocery transaction was down 9.1 per cent.

Spend on petrol was down 8.1 per cent, partly driven by falling forecourt prices which are at their lowest level in three years. The number of transactions was also down though, by 3 per cent, suggesting that consumers are using their cars less. This picture is also borne out by public transport spend growing 9.1 per cent.

Spending on entertainment grew strongly however - up 7.1 per cent - as households felt they had cut themselves enough slack elsewhere to be able to spend a little more on enjoying themselves. Restaurant spending led the way, growing 11 per cent.

Clothing also remained strong, rising 9.9 per cent and posting its second best performance of the last two years.

The buoyant housing market continued to push up spending on DIY, which rose 16.6 per cent in March - its highest reading in the past two years. And the early spring weather helped push garden centre spend up by over a third (36.2 per cent).

Of the UK regions, the North East saw the strongest year-on-year spending growth (1.9 per cent), followed by South East (1.7 per cent), with Scotland on the other hand seeing a decline (0.6 per cent down).

Val Soranno Keating, CEO of Barclaycard, said:

"While a number of economic indicators are pointing in the right direction, with employment up and inflation falling, consumer spending remains in the doldrums, registering a drop in real terms compared to last year.

"There may be more people in employment, but the economic recovery has not yet translated into wage growth, which continues to be sluggish. With predictions that wages won't return to pre-recession levels for another three years the outlook for consumer spending is set to be uncertain for some time to come." 

Spending in detail

Total spend growth March 2013 - March 2014 (select categories)

Total spend growth March 2013 - March 2014 (key retail categories)

Online spend growth March 2013 - March 2014 (top performing categories)

Total spend growth March 2013 - March 2014 (all UK regions)


For more information please contact Tom Foxton, Media Relations Manager, Barclaycard, on 07880 184381.

Barclaycard processes nearly half of all card transactions in the UK. Our spending data is based on transactions from our UK credit card business, UK payment acceptance business and spending on Barclays debit cards.

All data in this release relates to the period from 23 February 2014 to 29 March 2014 and compares it with 24 February 2013 to 30 March 2013.

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