The bank’s monthly spending report revealed holidays and airline travel saw the biggest annual growth in spending in March. 

Spending on trips abroad and travel continues to see year-on-year growth, with 37% annual growth in the amount spent on airline travel, while spending on holidays was 16% higher than in March 2022 as people look to give themselves something to look forward to.

Nationwide’s poll shows more than a quarter (26%) of Brits are prioritising spending on holidays despite economic challenges.

The monthly report analysed around 234 million debit card, credit card and Direct Debit transactions and showed  around £8.84 billion was spent in March, with overall consumer spending – including essential and non-essential categories – growing 9% year-on-year, with transactions up by 8%. 

However, as a result of inflation combining with a range of external factors, which have fuelled price rises across the board, households are under continued pressure to reduce spending where they can.

As a result, essential spend in March rose by 11% year-on-year, close to double the growth of non-essential spending (6%).

Separate research conducted by Nationwide in April shows more than two-thirds (67%) are worried about the state of their personal finances and ability to cover essential costs. This is up on last month (63%) but still down on February (70%).

Mark Nalder, payments strategy and performance director at Nationwide Building Society, said: "With inflation remaining high and the rising cost of living, it’s perhaps unsurprising to see an increase in the number of people concerned about their finances and ability to cover the essential costs.

"Despite pressures, discretionary spend remains fairly buoyant as households continue to balance what they need versus what they want. We should expect to see this continue as we approach summer and the weather gets warmer."

Earlier this month, data from youth travel specialist Kilroy found young people in the UK were prepared to spend more on overseas holidays in 2023, while Barclays found spending on travel – particularly with travel agents – is continuing to rebound faster than all other areas of non-essential spend.