Shopping and energy bills rising? Worried about the economy? Maybe it’s time to book a holiday.
New figures show that households are responding to the cost of living squeeze by scrimping on essentials while splashing out on lipstick, Netflix and overseas breaks.
Data from Barclays covering ten years of consumer spending reveals that households are responding to tougher times by prioritising beauty, entertainment and travel.
It found that over the past three years, ‘discretionary’ spending had risen by 9.2 per cent a year on average, compared to 5 per cent for essentials.
That was despite nearly half saying they do not feel better off than they did a decade ago and two-thirds paying more attention to their budget.
At the same time fewer are optimistic about the economy, with just 28 per cent confident about the outlook, down from 45 per cent in 2015.
Priorities: New figures show that households are responding to the cost of living squeeze by scrimping on essentials while splashing out on lipstick, Netflix and overseas breaks
But the report said: ‘Even when making cutbacks, people are finding room in their budgets to spend on the things they love.’
Last year, overall retail spending fell by 0.4 per cent yet there was a 5.9 per cent rise for travel, a 5 per cent increase for entertainment and a 5.9 per cent boost for pharmacy, health and beauty purchases, the figures showed.
Barclays UK chief executive Vim Maru said: ‘Over the past decade, consumers have become savvier and more mindful about their spending. At the same time, they are more willing to spend on the things they truly value like travel and entertainment.’
The report covers a period during which a spell of double digit inflation left households struggling to make ends meet.
A steep rise in interest rates helped bring the spiral of price rises under control – but pushed up costs for mortgage borrowers.
And shoppers are still living with the consequences, with the report showing that they are increasingly aware of prices and concerned about ‘shrinkflation’ – when retailers protect their profits by selling a smaller packet of a product but still charging the same.
But it also showed that spending on travel has grown consistently since April 2021 when pandemic restrictions were lifted.
Spain and France have remained the preferred destinations though Turkey has moved up the rankings from eighth to fifth – highlighting its status as a more affordable destination.
And 33 per cent now spend a greater share of their income on getaways than they did a decade ago.
Tuned in: Some 88% of consumers are signed up to digital content subscriptions such as Netflix, with spending on such products up by 47.5% since the start of 2020
Meanwhile staycations are preferred by more than a third while 38 per cent say they use social media as a guide on where to visit.
‘Looking back over the past decade, no single event has reshaped travel quite like the pandemic,’ the report said.
‘It fundamentally changed how people value their time away – turning holidays from occasional treats into emotional essentials. Consumers are now more willing to prioritise spending on meaningful escapes.’
The report also revealed increases in spending on live entertainment, as fans splash out on events such as Taylor Swift and Oasis concerts.
Average monthly spending on entertainment has risen by 17.3 per cent since January 2020.
Meanwhile, 88 per cent of consumers are signed up to digital content subscriptions such as Netflix, with spending on such products up by 47.5 per cent since the start of 2020.
Those who are signed up on average pay £50.60 a month.
People are also spending more on beauty and going to the gym – each up by an average of more than 10 per cent a year in the last three years.
‘Consumers may be cutting back elsewhere, but when it comes to self-care, they’re willing to spend,’ the report found. ‘People are investing not only to look good but to feel good too.’
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