Brits are flocking to discount stores to stave off the impact of cost-of-living as Nationwide’s Spending Report reveals households spent 41 per cent more at budget outlets in January versus last year.
The Nationwide Spending Report1 – a monthly analysis of more than 214 million debit card, credit card and Direct Debit transactions – shows c.£7.5 billion was spent overall in January. This marked a three per cent increase compared to the previous year, while transactions were up four per cent year on year as the impact of the cost of living continues to bite (see breakdown of categories below and in the tables in Notes to Editor).
Many are turning to bulk buy and discount retailers – from Poundland and B&M to Temu and eBay - in a bid to save money at a time essential costs continue to increase. It comes as many people have also switched to cheaper supermarkets to make savings, with retailers like Lidl and Aldi seeing annual increases in spend of 10 per cent and three per cent respectively.
The data correlates with the growth of the UK’s Value, Discount, Variety Stores and General Merchandise Retail Market, which is forecast to grow at a rate of more than four per cent until 20272 as a result of the cost-of-living crisis.
According to Nationwide’s data, both essential and non-essential costs were up year on year in January, by three per cent and two per cent respectively. The cost of housing saw the biggest rise, with renters seeing a 28 per cent increase compared to January 2023, while mortgage repayments increased 11 per cent year on year. However, household budgets were also stretched further by increases in insurance (+17%), travel (+10%), tv and broadband (+8%), debt repayments (+7%), pet costs (+7%) and supermarket spend (+6%).
Despite ongoing financial pressures, discretionary spending rose in January, negating some of the cutbacks seen in previous months. Spending increased year on year across multiple categories including: subscriptions and digital goods (+12%), health and beauty (+9%), gardening (+7%), charity donations (+6%) and holiday and airline travel (+6%).
However, Brits reduced annual spend on non-essential items such as DIY and home improvements (-13%), gambling (-5%), clothing and shoes (-2%), dating (-2%) and spending in general retailers/department stores (-1%).
Essential spending overview (full data by category in table below): the amount spent in January reached around £4.5 billion – a three per cent increase on January 2023. The volume of essential transactions (c.116m) was up seven per cent on January last year. Highlights include:
- Mortgages and Rents: spending was up 11 per cent year on year, while rent payments increased 28 per cent.
- Discount stores: spend rose by 41 per cent year on year, a sign people are shopping around to increase spending power.
Non-essential spending overview (full data by category in table below): at £2.9 billion, overall non-essential spending was up two per cent on last January. The number of transactions (c.97.6m) was up one per cent against January 2023. Highlights include:
- Holidays & airline travel: spend was up six per cent year on year as the cold weather spurred people to book breaks.
- DIY/Home Improvement: many have likely shelved projects to save money, with spend down 13 per cent year on year.
- Health & Beauty: Spend on health and beauty rose nine per cent year on year possibly a sign of people focusing on their health and wellbeing as part of New Year’s resolutions.
Mark Nalder, Nationwide’s Payments Strategy Director, said: “Our data highlights how many households are being resourceful with their finances by spending smart. But despite essential costs remaining high, there are potential green shoots of optimism, with non-essential costs up year on year – demonstrating that many are able to balance what they need with what they want.
“We would encourage anyone who is struggling financially to get in touch with their financial services provider to help them get back on track.”
Britain’s biggest building society has operated a dedicated cost-of-living helpline (0800 030 40 66), with trained experts able to provide support in-branch, over the telephone or by video (see Notes to Editor). Support can range from conducting financial health checks to forbearance options for those facing financial difficulties.
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