Figures show the travel sector once again bucking the trend of cautious spending as the cost of living crisis continues to bite. Spend and transactions on airline fares grew more than 34% year on year in the period from 22 April to 19 May. Travel agents saw transactions grow 19.9%, with spend up 9.9%. In comparison, across all sectors, card spend increased by just 3.6% in May.
Barclays, which accounts for nearly half of the nation’s credit and debit card transactions, said 13% of consumers had set money aside for a holiday abroad this year. However, spending on hotels, resorts and accommodation saw a 4.9% decline, which Barclays said meant demand for staycations “is tapering off” now holidaymakers have the option to travel abroad.
The latest survey saw grocery spending up 9%, the highest in two years, with the Office for National Statistics estimating food price inflation running at 19%. However, spend on fuel saw its third consecutive month of decline in May, down 10.7% per cent year-on-year. Barclays said this was largely thanks to the drop in prices against May 2022 in the immediate aftermath of the invasion of Ukraine.
The card provider said despite persistent cost of living pressures, 64% of consumers felt confident in their household finances, with 68% able to live within their means each month. Confidence in the future of the UK economy also slightly increased, rising from 25 to 28%.
Barclays director Esme Harwood said: “Consumers are still paying close attention to their everyday spending, and we are seeing growing concerns around “shrinkflation” in the weekly shop.
“Many are having to forgo discretionary purchases to offset rising food prices, with clothing and restaurants most impacted. However, the growth witnessed at pubs, airlines and entertainment venues shows that Brits are still finding room in the budget to enjoy nights out and holidays.”
Barclays is however cautious about the outlook for the coming months. Silvia Ardagna, its head of European economics research, said: “Although the latest headline figures show that inflation has fallen due to lower energy prices, the prices of core services and goods remain stubbornly high and continue to constrain real household disposable income and spending.
“The UK economy has escaped a technical recession for now, but the forward-looking outlook remains one in which the economy is likely to stagnate as the impact of monetary tightening will more than offset the relief from lower energy prices.”
