Insight Flash: UK Consumer Discretionary vs Non-Discretionary May Spending
UK debit and credit card data from Consumer Edge shows that British consumers appear to be feeling the pinch from inflation. While spend in grocery accelerated in May, spend in discretionary areas like restaurants, leisure, and electronics softened.
UK grocery spend increased by 16.3% y/y, up from +12.1% y/y in April. This is the ninth consecutive month of spend growth for UK grocers. Spend growth at discount retailers such as Aldi (+29.2%) and Lidl (+28.8%) exceeded that of the ‘Big 4’; average spend growth at Tesco, Morrisons, Asda and Sainsbury’s amounted to +13.8% in May. This may partially be explained by unit growth, but notably, average spend per unique customer is growing faster at the discounters versus other grocers. Consumers remain price conscious in the face of inflation.
Spend in discretionary areas is softening. The Leisure and Recreation industry saw spend growth decelerate to +2.5% in May (from +4.7% in April) and Electronics Retailers spend growth decelerated to -7.5% y/y (from -6.8% in April). Full-Service Restaurants meanwhile exhibited a notable deceleration in spend growth to +2.1%, from +6.5% in April.
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