By Daniel Hunter

Barclaycard’s monthly analysis of UK spending shows that consumer spend eased again in October, up 1.9% year-on-year, as consumers continued to take a cautious approach to managing their finances and saved up ahead of Christmas.

This was the first month since March where spend growth was below the rate of inflation and may reflect the fact that with wages continuing to fall in real terms, and consumers unwilling to use savings to fund purchases, discretionary spend is becoming more limited.

The wetter weather and the arrival of the ‘St. Jude’ storm towards the end of October also deterred people from hitting the high street and led to many opting to shop from the comfort of their own homes. In-store spend grew just 0.3% year on year, whereas online spend recorded another month of strong performance, up 8.7%.

Shoppers continued to look to bag the best bargains and spending habits showed once again a ‘little and often’ trend. Average transaction values were down 3.7% in October compared to the same time last year, but volume levels were up 6.0% year on year as people sought value for money.

Performance in the travel and entertainment sector was mixed; with restaurant spend showing an impressive 11.9% year on year increase, although consumers continued to spend less on each visit, with the average ticket price down 6.4% compared to 2012. Cinema spend, meanwhile, fell 3.2% vs. last year, recording its lowest reading so far in 2013, due in part to the strong performance of Skyfall in 2012. Airline spend improved, up 3.0% year on year, although this is still far from the double-digits growth seen in the first half of 2013.

The rebounding housing market continued to drive up DIY store spend with figures up 10.2% compared to last year, the highest DIY growth witnessed in 2013.

Electronic stores also saw an 8.5% year on year increase in spend in October, their best performance this year. Whilst clothing spend slowed from September and was up only 1.4% year on year in October, family clothing continued to grow at a solid 3.6%, reaching a three month high.

Val Soranno Keating, Chief Executive of Barclaycard said: “After six months of above-inflation growth in spending, we've seen a slowdown this month showing that, despite a generally positive outlook for the economy, consumers continue to manage their finances cautiously. But with the underlying economic fundamentals still positive there are plenty of reasons to think this is a blip rather than a trend. With mortgage approvals running at record rates and Christmas just around the corner, consumers may just be more discerning when it comes to spending their hard-earned money. The continuing absence of wage inflation, coupled with consumers’ unwillingness to use their savings to fund purchases, is another possible reason for the slowdown.

“The wetter weather at the end of October is also likely to have contributed to people staying at home rather than venturing out onto the high street and where consumers are spending they continue to look for value. While their love affair with eating out continues - restaurants showed an impressive 11.9% year on year increase — they are spending less each visit. And spend on public transport continues to be strong, comfortably outstripping spend on petrol in October.”

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