Consumers increase spending on themselves as concerns over finances reach highest level this year

A widening gap between essential and non-essential spending narrowed in April as households spend increasingly more money on themselves, reveals Nationwide’s latest monthly Spending Report¹.

There has been positive annual growth in non-essential spending every month so far this year and that continued in April, with an eight per cent year-on-year rise recorded.

Despite this, new consumer research² highlights around three quarters (74%) of people are worried³ about their personal finances and ability to cover essential costs – the highest level this year and four per cent up on the previous high of 70 per cent in February.

Nationwide’s Spending Report – a monthly analysis of nearly 232 million debit card, credit card and Direct Debit transactions – shows that c£8.82 billion was spent overall in April – including essential and non-essential categories. This marked an eight per cent increase compared to the previous year as a result of rising prices and increased transactions (see breakdown of categories below and in the tables in Notes to Editor).

While April saw a slight fall in annual growth in essential spending (+9% year on year in April vs +11% year on year in March), non-essential costs rose by eight per cent – with all but two categories (DIY and subscriptions) increasing. There was a nine per cent rise in transactions within that period too – highlighting that households are buying more as well as spending more.

Non-essential spending overview (full data by category in table below): at £3.15 billion, overall non-essential spending was up eight per cent on last April (a small uptick on the year-on-year growth in March: +6%), while transactions (c106.3m) were up by nine per cent.

• Airline travel: There was a 34 per cent annual growth in spending on airline travel as members continued to fly domestically and internationally for holidays and work, with the number of transactions made to airlines up 36 per cent.
• Holidays: Linked to airline travel, there was a nine per cent growth in spending on holidays (with a nine per cent increase in transactions) compared to April 2022 as more people took or booked breaks over the Easter period.
• Digital goods: There was a 33 per cent annual rise (+27% rise in the number of transactions vs April 2022) as consumers look for ways to remain entertained when staying in at home.
• Eating and drinking out: There were 10 per cent more transactions made on eating and drinking out during April than compared to the same month last year, with spend up 13 per cent versus April 2022.

Essential spending overview (full data by category in table below): the amount spent during April reached around £4.33 billion – a nine per cent increase on April 2022 (and a small drop on the annual growth in March: +11%). The volume of essential transactions at c116.6m was up nine per cent on 12 months’ previous.

• Utilities: Spending on utilities, such as electricity, gas and water was nearly a quarter (+23%) higher than it was in April last year, with the average transaction value rising 26 per cent to £91 in April (compared to £72 in April 2022).
• Supermarket: With food and drink inflation remaining stubbornly high, there was an 18 per cent annual growth in spending in supermarkets in April. However, there was also a 12 per cent rise in supermarket transactions compared to April 2022, which could be due to members taking advantage of the Society’s recent supermarket cashback offer⁴.
• Childcare and education: Childcare spend increased during April as parents covered the Easter holiday period. Overall spending was up 12 per cent on April last year (+31% vs March 2023), while transactions were 14 per cent higher than last year (although -41% vs March 2023, suggesting a high cost of childcare during school holidays).
• Car finance: Overall spending (-14%) as well as the number of transactions (-14%) made on car finance were both down in April compared to the same month last year as people either come to the end of their existing deal or look to delay getting a new car.

Despite the decline in spending on car finance, a quarter (25%) of people surveyed² say they are planning to buy or lease a car in the next 12 months, with three quarters (75%) of those admitting that the price of the car or the cost of the repayments will be the main factor in the type or model of car they purchase.

Financial worries:

Nationwide’s consumer research shows that when it comes to worrying about finances, the 74 per cent average figure jumps to 81 per cent for those aged 25-34 and drops to just over two thirds (68%) for people aged 55 and over. Regionally, those in London are most concerned (81%), while people in Yorkshire and The Humber (65%) are the least concerned³. The research also shows that once all the essential spending is covered, people have an average of £413.41 left for non-essential spending (down from £466.51 last month).

Financing the school summer holidays:

According to Nationwide’s poll of more than 2,000 people², close to six in ten (57%) parents are worried³ about how they will finance the cost of the school summer holidays, with around a fifth (19%) extremely worried. This is most acutely felt in Scotland (69%), compared to just 41 per cent of parents in the East Midlands.

Parents expect to spend an average of £545.99 per week to cover the cost of feeding and entertaining children as well as childcare during the summer holidays. This includes:

• £207.24 per week: Feeding children (e.g. food shopping, buying treats, additional meals, eating out, parties)
• £187.37 per week: Entertaining children (e.g. buying games, days out, activities, summer camps)
• £151.38 per week: Childcare

Credit card balances:

With a three per cent annual growth in spending on credit card repayments¹, the Society’s research² shows that the average balance people have on their credit card sits at £2,311.52, with men having a significantly larger outstanding balance (£2,750.86) than women (£1,814.12).

Mark Nalder, Payments Strategy & Performance Director at Nationwide Building Society, said: “While the growth in consumer spending is mainly down to inflation and, consequently, rising costs, people are also making a higher number of purchases, with the number of non-essential transactions in April up nine per cent year on year.

“Despite this, our poll points to a peak in people being concerned about the state of their finances as we approach summertime – a period when costs tend to rise for many due to the school summer holidays and planned breaks.

“As the year progresses, it will be interesting to see how households balance their outgoings. Getting items for the best possible price is front and centre for a lot of people, none more so than when it comes to buying a car. Three quarters of those looking to purchase a new vehicle in the next 12 months admit that the cost will be the number one factor when considering the type of vehicle bought.”

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