Consumers have performed an about turn on discretionary spending this summer as previous attempts to cut back on costs are put on ice as the nation makes the most of the holiday season.
Nationwide Building Society’s latest Spending Report1 shows discretionary spending in July saw all but two categories increase. This was almost a mirror image of June, when discretionary spend had reduced across all but one category – the first real sign households were beginning to conserve their outgoings in order to cover essential bills.
The monthly report – an overview of debit card, credit card and Direct Debit spending made by the Society’s members – reveals consumers spent more and made more transactions in July, both month-on-month and compared to last July, when the last remaining Covid restrictions were removed.
Overall spending in July rose five per cent compared to June and 11 per cent versus July 2021, totalling nearly £8.4 billion. A total of just over 230 million transactions were made in July – a six per cent increase in the number of transactions made by members in June and a 13 per cent increase on the number made last July.
Essential spending snapshot: July accounted for more than £3.8 billion of essential spending – 12 per cent more than last July, and six per cent more than in June. There was also a 13 per cent increase in the number of essential transactions compared to last year (+5% vs June). The sectors that have seen the biggest growth in spending compared to July last year are childcare (+38%), fuel and electric car charging (+37%), travel via public transport and taxis (+47%) as well as utilities and bills (+20%). Month-on month, childcare spending fell 10 per cent versus June as parents take time off to look after children during the school holidays.
Non-essential spending snapshot: Nearly £3 billion was spent by Nationwide members on non-essential items during July – 14 per cent more than the same month last year, and five per cent more than in June. At around 103 million, the total number of non-essential transactions in July was 15 per cent higher than the same month last year. Holidays, cruises and airline travel continue to see significant growth for spending year-on-year as people enjoy the summer season by taking well-earned breaks, potentially while finances still allow. Leisure and recreation as well as eating and drinking also saw both annual and monthly growth as people enjoy the good weather to socialise with family and friends as well as watch sporting and other events around the UK. Areas that have seen a decline in spending year-on-year includes dating (-4%), DIY (-7%), gardening (-8%) and subscriptions (-5%).
Spending on Amazon: With Amazon Prime Day taking place on 12-13 July, Nationwide analysed spending on Amazon in July over the last three years. Despite the cost-of-living crisis, spending by Nationwide members was at its highest in 2022 at £140.32 million. This is higher than the £140.17 million spent by members on Amazon in July 2020 and is a significant increase on last July when only £128.88 million was spent via Amazon.
Mark Nalder, Head of Payments at Nationwide Building Society, said: “The good weather and the start of the summer holiday season saw spending tick up in July, particularly on non-essential items such as going on holiday, buying new clothes and shoes as well as eating and drinking out with friends and family.
“Spending levels are higher this year than they were last year; this is perhaps reflective of two things – the nation having fully emerged out of the pandemic and the current environment higher prices and with the annual rate of inflation 8.1 percentage points2 higher than it was in July 2021. However, perhaps more surprising is the increase in the total number of transactions members made in July this year compared to 12 months previous. This suggests that despite the tough times facing consumers, many are seemingly throwing caution to the wind this summer knowing it may well be a bit of a final hurrah before the costs bite in this autumn. However, we are seeing the continuation of cutbacks against this backdrop of heightened spend, with notable drops in discretionary spend such as subscriptions, DIY, dating and gardening – all down compared to July last year. We should get a clearer picture of how we are coping as we head into September.”
Essential spend overview:
- Fuel & Electric car charging: Spending is up 37 per cent year on year (+7% versus June), which is no doubt reflective of the increased costs to fill up at the pump. Despite the current fuel prices, it’s perhaps surprising to see the number of transactions up 10 per cent year-on-year and up six per cent June as people continue to use their cars, bikes and vans. The average transaction value of £31.49 is 24 per cent higher than in July 2021.
- Childcare: As we move into the summer holiday period, childcare spending is down 10 per cent month-on-month (number of transactions down 13%) as parents take time off work to spend time and look after their children. However, despite this drop in July, spending is still up by more than a third (38%) compared to July last year.
- Debt: Spending to pay off debts such as credit cards and personal loans is up 13 per cent on July last year (+5% versus June) as more and more people need to resort to spending on credit as a result of the rising cost of living.
- Travel: Spending on public transport and taxis was up by 47 per cent in July (+6% versus June) compared to the same month last year. A combination of more people going back to the office, good weather and lack of Covid restrictions mean more people are getting out and about.
- Utilities and bills: Rising energy bills have seen spending on utilities and other bills rocket by 20 per cent compared to the same period last year. They are also eight per cent higher than in June. The average transaction value of £94.39 is 14 per cent higher than in July last year.
- Supermarkets: With food and drink soaring in price this year, supermarket spend is up nine per cent year-on-year (+7% versus June), with transactions in supermarkets up by 15 per cent during the same period.
|
ESSENTIAL SPEND (July 2022) |
||||||
|
Spend category |
Total spend in July 2022 (£) |
% Change vs June 2022 |
% Change vs July 2021 |
Total transactions (July 2022) |
% Change vs June 2022 |
% Change vs July 2021 |
|
Childcare |
2,906,066 |
-10% |
38% |
99,453 |
-13% |
30% |
|
Debt |
585,387,383 |
5% |
13% |
2,898,694 |
1% |
5% |
|
Discount stores |
102,029,131 |
4% |
7% |
4,774,408 |
5% |
8% |
|
Fuel/electric vehicle charging |
334,319,920 |
7% |
37% |
10,617,733 |
6% |
10% |
|
Insurance |
228,230,385 |
1% |
0% |
4,843,442 |
-1% |
1% |
|
Mortgage payments |
171,568,661 |
-1% |
8% |
283,222 |
-2% |
3% |
|
Motoring |
221,339,043 |
8% |
-8% |
1,614,187 |
5% |
5% |
|
Pets |
47,304,761 |
8% |
6% |
1,022,708 |
7% |
3% |
|
Rent payments |
18,018,060 |
-2% |
5% |
80,056 |
1% |
1% |
|
Supermarkets |
1,057,153,457 |
7% |
9% |
58,961,739 |
7% |
15% |
|
Travel |
124,171,337 |
6% |
47% |
12,429,400 |
6% |
30% |
|
TV, phone, broadband |
257,674,230 |
2% |
4% |
7,431,510 |
4% |
2% |
|
Utilities & Bills |
669,694,983 |
8% |
20% |
7,095,294 |
1% |
5% |
|
TOTAL |
3,819,797,417 |
6% |
12% |
112,151,846 |
5% |
13% |
Non-essential spend overview:
- Holidays and airline travel: Continuing a trend that has been seen in each of the Society’s Spending Reports this year, spending on holidays and airline travel continues to rise. Spending on airline travel is flying – up 164 per cent on July last year (+5% on June) as more people look to travel abroad for their summer holiday. The amount spent on holidays (e.g. hotels, travel agents and packages) grew by 68 per cent on last year (+2% on June).
- Eating and drinking: Warm weather has encouraged people to get out and socialise with family and friends in pubs and restaurants. Spending was up by a fifth (20%) on July last year and up eight per cent on June, despite last month seeing the four-day Jubilee Weekend.
- Clothing and shoes: Data suggests that people are refreshing their wardrobes for the summer with the number of transactions on clothing and shoes increasing 13 per cent on June, with total spend up seven per cent.
- Leisure and recreation: A combination of good weather and numerous sporting, music and other events saw spending on leisure and recreation climb 15 per cent on last year and six per cent on June.
- Subscriptions: Although July saw a small month-on-month increase (+8% versus June) on subscriptions such as Netflix, Amazon Prime, wine and magazines, it remains down on how much was spent in July last year (-5%) following a rise in subscriptions during the pandemic.
- Gardening: Spend on gardening continues to wilt as the total amount spent fell 18 per cent compared to June and is actually also lower than July last year (-8%), with fewer transactions made.
|
NON-ESSENTIAL SPEND (July 2022) |
||||||
|
Spend category |
Total spend in July 2022 (£) |
% Change vs June 2022 |
% Change vs July 2021 |
Total transactions (July 2022) |
% Change vs June 2022 |
% Change vs July 2021 |
|
Airline travel |
59,491,128 |
5% |
164% |
383,095 |
3% |
151% |
|
Charities |
48,517,549 |
4% |
4% |
2,287,857 |
3% |
11% |
|
Clothing/Shoes |
252,235,201 |
7% |
15% |
6,127,550 |
13% |
14% |
|
Cruises |
13,024,776 |
-7% |
151% |
57,726 |
8% |
110% |
|
Dating |
1,339,818 |
13% |
-4% |
50,591 |
6% |
-23% |
|
Digital Goods |
49,456,773 |
6% |
19% |
5,707,190 |
5% |
12% |
|
DIY/home improvements |
273,866,959 |
4% |
-7% |
4,097,099 |
4% |
-1% |
|
Eating/Drinking |
539,903,390 |
8% |
20% |
38,703,394 |
8% |
23% |
|
Gambling |
199,647,979 |
6% |
0% |
8,607,406 |
10% |
14% |
|
Gardening |
22,736,277 |
-18% |
-8% |
721,280 |
-14% |
-5% |
|
General retail/dept stores |
303,639,313 |
9% |
11% |
10,614,615 |
9% |
6% |
|
Health/Beauty |
195,346,333 |
5% |
7% |
6,067,432 |
6% |
15% |
|
Holidays |
342,924,935 |
2% |
68% |
2,312,467 |
9% |
34% |
|
Leisure/recreation |
175,039,280 |
6% |
15% |
6,061,645 |
9% |
19% |
|
Other shops |
489,552,274 |
3% |
2% |
9,550,511 |
4% |
5% |
|
Subscriptions |
20,087,501 |
8% |
-5% |
1,634,831 |
6% |
-1% |
|
TOTAL |
2,986,809,485 |
5% |
14% |
102,984,689 |
7% |
15% |
Ways to pay:
Despite the cost-of-living crisis and the potential need to spend via credit, it was actually spending on debit cards that saw the biggest month-on-month increase (7%), whereas spending on credit cards only rose three per cent.
With many people paying bills via Direct Debit and with these monthly costs rising, there has been a 12 per cent increase in the amount spent via Direct Debit compared to July last year, according to Nationwide’s Spending Report.
|
WAYS TO PAY (July 2022) |
||||||
|
Total spend in July 2022 (£) |
% Change vs June 2022 |
% Change vs July 2021 |
Total transactions (July 2022) |
% Change vs June 2022 |
% Change vs July 2021 |
|
|
Debit card |
5,249,807,977 |
7% |
10% |
187,367,977 |
7% |
16% |
|
Credit card |
778,275,293 |
3% |
15% |
15,596,647 |
4% |
9% |
|
Card contactless3 |
1,113,000,812 |
7% |
34% |
79,264,248 |
7% |
12% |
|
Mobile payments4 |
535,825,717 |
10% |
87% |
42,013,059 |
8% |
76% |
|
Direct Debit |
2,366,640,802 |
1% |
12% |
27,389,542 |
-1% |
2% |
|
TOTAL |
8,394,724,072 |
5% |
11% |
230,354,166 |
6% |
13% |
Nationwide cost-of-living support:
Nationwide Building Society has also launched a freephone hotline to support members struggling with the rising cost-of-living. Launched at the start of this month, members can speak to dedicated, trained experts based across the Society’s main branches. The service will be available from 9am-4.30pm weekdays and 9am-12pm Saturdays. Nationwide aims to answer calls to the hotline within ten minutes. Outbound calls will also be made. The Society also encourages anyone in financial hardship should contact their bank or building society for support. See more at Cost of living | Nationwide.
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