Nationwide Spending Report: Consumer spending rises but financial worries fall to lowest level

Household spending continued to rise in June while worries about household finances fell to their lowest level this year, according to Nationwide Building Society.

The Nationwide Spending Report¹ – a monthly analysis of more than 239 million debit card, credit card and Direct Debit transactions – reveals c£8.63 billion was spent overall in June, 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, which were up 10 per cent on last year (see breakdown of categories below and in the tables in Notes to Editor).

June recorded a continuation of the positive annual growth on non-essentials. Spending rose seven per cent compared to the same month last year, while the number of transactions made on discretionary items was eight per cent higher.

The growth in spending coincides with a drop in the number of people who are worried about their personal finances and ability to cover essential costs. According to Nationwide’s latest poll², this now stands at 57 per cent³ - down from 67 per cent last month and the lowest it has been this year.

But despite the rising optimism, nearly three in five (57%) households are cutting back on spending due to high costs, with that figure rising to 61 per cent in the East Midlands and falling to 48 per cent in the North East.

According to the poll, after buying all the essential items, people have an average of £289 left as spare money with 42 per cent⁶ admitting that figure has decreased since last year.

Non-essential spending overview (full data by category in table below): at £3.17 billion, overall non-essential spending was up seven per cent on last June. The number of transactions (c106.8m) were up by eight per cent compared to last year. Highlights include:

• Airline travel: There was 38 per cent annual growth in airline travel spend with the summer season in full swing as people booked flights for holidays and work, with the number of transactions made to airlines up 37 per cent on June last year.
• Charities: Despite concerns about the rising cost of living, people are continuing to support charities. Spending was up nine per cent on June last year with the number of transactions 10 per cent higher than 12 months’ previous.
• Gardening and garden centres: As we move through the summer season, it’s no surprise to see spending on gardening higher (12%) than June last year, with transactions up 14 per cent. However, spending was down slightly on May (-28%) although this could be down to having no bank holidays in June compared to three in May.

Essential spending overview (full data by category in table below): the amount spent during June reached around £4.31 billion – a seven per cent increase on June 2022. The volume of essential transactions, at c122.7 million, was up 10 per cent on 12 months’ previous.

• Mortgages and Rents: spending on mortgage payments in June was up 14 per cent year on year, while spend on rent payments increased 19 per cent.
• Utilities: spending on utilities, such as electricity, gas and water in June was 15 per cent higher than the same month in 2022, with the average transaction around £90 a month (£89.86).
• Supermarkets: spending in supermarkets continues to see year-on-year growth. This is due to people making more transactions and food and drink prices remaining high. June saw a 14 per cent annual growth in spending, while the number of transactions made was 13 per cent higher than last year.

Mark Nalder, Payments Strategy & Performance Director at Nationwide Building Society, said: “Uniform growth in spending suggests that, despite higher prices, people are able to manage their money by balancing the things they need with the things they want. This is reflected in the findings of our research, which shows that financial optimism has reached its highest point this year, although this must be put in perspective given how low confidence had been previously.

“The more upbeat mood comes despite our research showing that people’s spare money has decreased over the last year, perhaps indicative of households becoming more effective at managing their money. Despite inflation reducing, it remains stubbornly high and, with the summer holidays starting, we can expect spending growth to continue in the months ahead.”

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