Spending on essentials has hit record highs
Spending on essential goods such as food and fuel has reached record highs as inflation has started to hit the UK consumer's wallet.
There was a 15.3 per cent jump in petrol spending year-on-year in January, according to Barclaycard, and a 2.9 per cent hike in supermarket expenditure. This was coupled with a 3.4 per cent drop in spending on electronics and a 1.6 drop in spending in department stores.
This led to a 5.8 per cent growth in spending on 'essential' items, the highest growth in this category that Barclaycard has ever recorded. Spending on discretionary goods fell by four per cent – the fourth month of decline for non-essential items.
Read more: Inflation hits 1.6 per cent: Experts react to increase
The data comes as the British Retail Consortium (BRC) and KPMG figures reveal that UK retail sales fell by 0.6 per cent in January as compared to the same month last year. The BRC said food spending was resilient, but that shoppers were cutting back on non-food items.
Inflation hit 1.6 per cent in December – the biggest price rise for two years – and it is thought the squeeze on spending will continue. Think tank Retail Economics has forecast inflation to hit three per cent this year.
Paul Lockstone, managing director at Barclaycard, said: "January's uplift in spending represents a strong start to the year. Big increases in the amount spent at supermarkets and on petrol, coupled with careful spending across a number of non-essential categories, does however suggest that consumers are starting to feel the impact of inflation on their everyday lives."
He said that the figures suggested consumers were having to "reshuffle their spending priorities for the year ahead".