Barclaycard Reveals How UK Consumers are Coping with Cost-of-Living Crisis

From re-using back-to-school items to starting side-hustles, new data from Barclaycard reveals how Brits are “changing their spending behavior to make their money go further during the cost-of-living crisis, while also trying to make the most of the summer holiday period.”

Insights are taken from Barclaycard’s monthly Consumer Spending Index, which “combines the hundreds of millions of customer transactions recorded in July 2022 with consumer confidence data to provide an in-depth analysis of UK spending.”

Summer-saving behaviors – July 2022

1. Re-using back-to-school items

With the new school term fast approaching, “three in five parents (60 per cent) say they will be doing back-to-school shopping for their children this year, with over a quarter (26 per cent) expecting to spend more on items than usual because of rising prices.”

A similar proportion (25 per cent) will be “looking to re-use items from previous years instead of buying new, and a fifth (21 per cent) intend to spend less than expected to save money.”

Meanwhile, “one in five (21 per cent) plan to donate their children’s old uniforms to others who can’t afford to buy items new.”

2. Starting a “side-hustle”

In efforts to manage the cost-of-living crisis, “nearly one in twelve (8 per cent) Brits has taken on an extra job or ‘side hustle’ to create a second income.”

While some jobs are more conventional – such as babysitting, selling clothes online, or tutoring – others “have been more adventurous; taking up fishing, crocheting and marking exams to top up their funds.”

3. Savvier money management

Nearly one in eight (12 per cent) Brits “has changed their banking or money management habits in response to the rising cost of living.”

Almost three fifths of this group (58 per cent) “are checking their bank balance more often, two fifths (39 per cent) are hunting for cashback offers and discounts through their work or subscription packages, and over a third (36 per cent) are reviewing receipts more closely to keep an eye on price changes for items bought regularly.”

In addition, some of these savers “are looking ahead to the winter energy price hikes, with one in five (21 per cent) planning to start setting aside money for Christmas much earlier than usual.”

Encouragingly, despite some cut-backs, “there has been a month-on-month rise in how confident consumers are feeling in their budgeting and financial planning.”

Specifically, more Brits are “confident about their household finances (up 7 per cent to 66 per cent), their ability to spend on non-essential items (up 6 per cent to 54 per cent), and their ability to live within their means (up 5 per cent to 71 per cent).”

4. Returning to in-store shopping

After a surge in online shopping during the pandemic, consumers are “increasingly returning to bricks-and-mortar stores – perhaps in an effort to gain more control over their spending and ‘try before they buy’ to avoid unnecessary purchases.”

In-store shopping grew faster than online in July, “with the value and volume of face-to-face transactions up 8.5 per cent and 12.9 per cent year-on-year respectively.”

By comparison, online shopping “saw a smaller 6.6 per cent rise in the amount spent, and a -3.3 per cent decline in the total number of transactions.”

5. Smaller shopping baskets

At the supermarket, Brits “are using smaller basket sizes as a way to keep better track of their budget throughout the month.”

Nearly two fifths (37 per cent) are “purchasing certain items on a need-to-buy basis to save money and avoid waste, resulting in an emerging trend for smaller baskets, and more frequent trips to the supermarket to restock when items run out.”

The average value of a supermarket transaction “has dropped from £23.67 in January 2021 to £19.33 in July 2022, while the average number of monthly supermarket purchases per person increased from 8.70 to 11.91 over the same period.”

6. Seeking more value from the weekly grocery shop

Almost nine in 10 (89 per cent) Brits “report seeing increases in the prices of everyday items at the supermarket, with the majority noticing that butter (53 per cent), milk (51 per cent) and meat (47 per cent) are more expensive than in June.”

As a result, 45 per cent of shoppers “report looking for ways to get more value from, or to reduce the cost of their weekly shop.”

Over half (52 per cent) of this group “are paying closer attention to the prices of items they buy regularly, and the same proportion (52 per cent) are cutting down on luxuries or one-off treats for themselves.”

In addition, “almost half (47 per cent) have been opting for budget or own-brand goods over branded items.”

7. Cutting back on summer socializing

Inflation, the hot weather and school holidays “all boosted discretionary spending in July, especially for clothing retailers (up 4 per cent MoM) and pharmacy, health & beauty stores (up 3.1 per cent MoM).”

However, demand for eating and drinking out “slowed due to the cost-of-living squeeze, with the category seeing a slight decline (-1.5 per cent) compared to June.”

This is likely “because almost one in three (29 per cent) Brits plan to spend less on social plans and days out this summer, with 67 per cent of this group cutting back on eating out at restaurants, and 55 per cent spending less at pubs, bars and nightclubs.”

8. Conserving water and energy at home

Average spending on utility bills “rose 43.9 per cent year-on-year in July, even higher than the previous month’s growth of 39.6 per cent.”

It’s therefore “unsurprising that over two fifths (41 per cent) are looking for ways to save energy and water at home.”

Of these Brits, “almost eight in 10 (79 per cent) are turning off lights when they leave a room, three fifths (59 per cent) are washing clothes on lower temperature settings, half (50 per cent) are taking shorter showers, and a quarter (26 per cent) are batch cooking.”

9. Staycations over holidays abroad

Rising living costs and airline disruptions “are the likely cause of one in five (20 per cent) Brits deciding against a summer holiday abroad this year, with 16 per cent opting to take a break in the UK instead.”

The popularity of staycations is “driving spend in the hotels, resorts and accommodation category, which grew 1.9 per cent compared to June.” Meanwhile, travel agents and airlines, despite “seeing year-on-year growth (204.0 per cent and 112.7 per cent respectively), were down month-on-month (-3.8 per cent and -3.0 per cent).”

10. Reducing car usage

Increasing petrol and diesel prices “led to a 29.9 per cent jump in fuel spending in July compared to the same period in 2021.”

In response, “a quarter of Brits (26 per cent) are looking to reduce the amount they travel by car.” Of this group, “almost three in five (57 per cent) are walking more, over half (53 per cent) are taking fewer long journeys, and a quarter (24 per cent) are using public transport more.”

Jose Carvalho, Head of Consumer Products at Barclaycard, said:

“The summer months are some of the year’s most expensive; typically filled with holidays, weddings, and parents needing to keep children entertained. This year, the cost-of-living crisis has squeezed budgets much further than usual, so consumers are having to find even smarter ways to cut back and save money.

For more details on this update, check here.

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