Consumers may be planning to splash out as Valentine’s Day approaches. Although consumer card spending slowed in January, as the Government’s Plan B restrictions, the impact of inflation and rising energy costs had an effect, it seems the nation’s big spenders are ready to be generous.
Barclaycard’s latest data shows consumer card spending rose 7.4% last month, compared to January 2020. This is the smallest increase since last April.
Nevertheless, there are “bright spots on the horizon” for the retail, hospitality and leisure sector, as spring approaches and consumers make plans for events to lift the mood, such as Valentine’s Day. According to Barclaycard, nearly a third of consumers plan to spend an average of £77 this year, up from a £63 budget during pandemic-hit 2021. Meals out at restaurants and gifts of chocolate or jewellery loom large on the wish list.
‘Brighter times’ ahead for the hospitality sector
Barclaycard, which accounts for almost 50% of Britain’s credit and debit card transactions, publishes its Consumer Spending Index monthly, and polled just over 2,000 people about their spending plans.
This January slowdown, taken from data recorded from December 25 to January 21 and compared to the matching period in 2019-20, was predictable, considering events at the end of 2021. Hospitality and leisure suffered a 6.3% decrease in January, following five months of growth, while spending on essentials rose by 10.4%, the smallest rise in nine months.
Both 16-24 and 25-34-year-olds (+0.9% and +0.5% respectively) continued to spend on hospitality, perhaps reflecting less concern about Omicron among younger people. Fuel spending growth slowed to its lowest since October, up 6.7%, as people cut down on work and social travel.
Spending in supermarkets saw a surprisingly sluggish 13.6% rise, leading to speculation that specialist retailers, such as butchers, bakers and recipe box services, benefited instead. Spending in this field rose 67.3%.
Despite these ongoing “economic headwinds”, upcoming events like Valentine’s Day are spreading optimism for “brighter times” ahead. For example, 39% of those surveyed said they intended to eat and drink out more.
Jose Carvalho, Head of Consumer Products at Barclaycard, acknowledged the problems faced by the leisure sector, but saw “signs of brighter times ahead for hospitality as Brits say they’re planning to spend more on eating and drinking out to lift their spirits during the winter months.
“The lifting of Plan B restrictions should also provide a welcome boost to many sectors, as workers travel back into the office and socialise over post-work drinks, while businesses will likely start to see the benefits of increased inbound tourism on retail sales too.”
What sort of credit card is best?
With a big Valentine’s Day event, or a holiday, in prospect, consumers may be looking at their credit options.
If you are looking to consolidate existing credit card debt, for example, a 0% balance transfer credit card might be best. Alternatively, if you wish to spread the cost of a big purchase, a 0% interest card will be ideal. You may also want to look at a cashback or reward credit card if you want to get something back from everyday spending, or perhaps a travel credit card if you’re eyeing up a foreign trip now that travel restrictions are easing.
The best credit cards for your needs will usually come down to the interest rates and fees charged and the associated terms and conditions. Typically, the lower the interest rate, the more cost-effective the card will be, so make sure to spend the time comparing options, using our dedicated charts to help. For more information read our comprehensive guide to credit cards
