The economic climate has changed vastly in the last year, with individuals becoming mindful of their saving and spending habits. What areas are being most affected by the ‘cost of living squeeze’ and which areas are seeing an increase in spending?
Barclays Bank has released a report stating the difference in spending habits, comparing March 2023 and March 2022, and are highlighting some clear differences between the years. Overall, consumer card spending has increased by 4% in March 2023, compared with 2022, displaying a growing consumer market, however, there has been a 5.9% decrease when comparing this month with February 2022. Are we beginning to see the start of austerity and people reducing their spending?
There is an obvious decrease in discretionary spending with 54% of individuals stating they are consciously trying to reduce unnecessary spending in 2023.
When specifically looking at hospitality and leisure spending it was found that the average March growth spend rate showed a 10.9% increase. Money spent at restaurants decreased by -5.6% in March 2023 compared to this time last year, as 33% of consumers say they are dining out at restaurants less often to save money. A further 36% are cooking more at home instead of eating out, whilst 21% are even avoiding social plans that involve eating out so they can save cash.
Nonetheless, there was positive spending growth for bars, pubs & clubs at 3.2% this month when compared to March 2022, whilst spend on takeaway and fast food also grew this month to 9.2%. This shows that individuals are looking for, in many cases, ways to spend less, whilst still being able to treat themselves by opting for affordable take away or fast-food options. This introduces the idea that consumers are conscious of pricing and currently focusing on how experiences can be inexpensive, yet enjoyable.
There is large growth in travel and entertainment, with people spending 24% more this year on travel than 2022. This increased spending could be due to the increase in fuel prices and increased costs of travel. Increased travel spending highlights a return after the pandemic, indicating consumer confidence and a trust in the safety of travel after Covid-19, especially with a 28% increase in international air travel. Yet, despite this increase there is a decrease in hotel and accommodation spending. This perhaps alludes to the fact that, despite more people travelling, there is a reduction in spending when looking at hotels, suggesting that whilst people are prioritising travel they are again looking for affordable experiences and perhaps reducing costs by staying with friends and family or in less expensive accommodation and hotels.
Overall, there are trends that individuals are still prioritising travel experiences in their spending budgets, yet with the introduction of a mindfulness concerning affordability. With the cost-of-living increase how will individuals proportion their disposal income? Should we expect that if this austerity continues there will be a change in consumer habits resulting in a greater reduction in spending in the hospitality and travel sector?