Consumers in the UK upped their spending in June as Brits headed to pubs and bars despite interest rates continuing to soar.
Data on credit card spending in June from Barclays PLC (LSE:BARC) showed an increase of 5.4% year-on-year, outperforming May which saw a 3.6% rise, though spending was still behind the 7.9% rate of CPIH inflation.
Pubs and bars saw an 8.4% rise, the largest spike this year, as beer prices increased, and Father’s Day and warm weather encouraged people to go out.
Esme Harwood, director at Barclays, said: “Pubs & bars benefitted from Brits soaking up the sunshine in beer gardens, while butchers and garden centres saw a jump thanks to the arrival of barbecue season.
“Even clothing retailers, which have struggled since the start of the cost-of-living crisis, returned to growth.”
Restaurants appear to be taking the brunt of consumers' tighter pockets, however. In June, spending at restaurants dropped by 8.2% annually, as 30% of Brits reveal they stopped eating out to save money.
Adding this to the backdrop of rampant closures in the industry, and the restaurant sector - especially independents - may face a tough rest of the year.
Supermarkets saw a spending increase of 9.5% year-on-year, representing the highest growth in the category in two years. Some 81% of supermarket shoppers revealed they were cautious about ‘shrinkflation’ as food producers and retailers look to save costs by reducing the contents of products.
Will Hobbs, chief investment officer at Barclays, warned that difficult times still lay ahead for household cash flows due to the surge in interest rates.
He added: “However, there are mitigants. Much of that extra mortgage strain will fall on households more able to bear it, with significant excess savings still left over from the pandemic.”