British consumer spending grew modestly in March, with underlying strains becoming evident.
Data from the British Retail Consortium (BRC) showed total retail sales increased by 1.1% year-on-year in March, consistent with February’s pace. Like-for-like sales also remained steady at 0.9%.
Consumer Resilience
The resilience of both food and non-food categories suggests consumers are quietly strengthening their appetite despite geopolitical pressures.
Contrastingly, Barclays’ wider measure of UK consumer spending, which includes debit and credit card transactions, showed a more subdued growth.
Spending rose only 0.5% year-on-year, down from 1.0% in February and not keeping up with inflation. Supermarket sales fell by 2.6%, though warmer weather boosted purchases at garden centres and specialty food retailers.
A potential slowdown in consumer activity could occur in the coming months. Spending is expected to remain muted until mid-2025. Recovery may begin gradually into 2026 as interest rate cuts and stabilised conditions take effect.
Analysis of Consumer Data
The article outlines two key sets of data that give us a fuller sense of where British consumer behaviour currently stands. On the one hand, the BRC’s retail figures, tracking physical and online sales from retailers, show a stable if cautious rise in March—an annual increase of 1.1% in all retail sales and 0.9% when stripping out store openings and closures. Essentially, consumers appear to be carrying on spending, albeit modestly, despite everything from higher borrowing costs to persistent energy uncertainties. Resilience here seems spread across both staple purchases and discretionary goods, which implies a level of confidence, yet it’s fair to say that such confidence remains patchy.
In contrast, the broader data from Barclays—not limited to retail but including wider categories such as transport, travel and entertainment—paint a slower picture. With growth in total spending slowing to 0.5% annually and supermarket spending retreating sharply, there’s a clearer sign that budgets may be tightening, even if promotional events or warm weekends encourage occasional splurges on gardening supplies or artisanal cheese.
The divergence between these two datasets is meaningful. It doesn’t just reflect different baskets of goods—it shows how selective people are becoming. Some areas are being trimmed back sharply, while others, especially those linked to weather or seasonal trends, see brief rallies. We see this as consumers making hard choices, prioritising here, pulling back there. And when this widening gap between essential and optional spending persists, it usually hints at broader caution beneath the surface.
So where does that leave things? Forward-looking expectations say spending might not pick up in any meaningful way until well into next year. Not because income has collapsed or confidence has vanished—but because the costs tied to debt and inflation still weigh heavily and take time to unwind. Bank policy will play its part, yes—but even once cuts eventually come through, the lag before those filter into household behaviour will likely be measured in quarters, not weeks.
From our perspective, that suggests certain assumptions need adjusting. Consumer-facing metrics may not offer quick signals. Sensitivity to interest-rate expectations will matter more than spot consumption prints. Monitoring shifts in categories like leisure, travel, and household improvement may prove more telling than broader aggregates. It’s not about chasing numbers but reading the shifts in where and how people direct what they have.
We also think it’s worth tracking footfall trends at physical outlets and volume-based metrics at essential retailers. Promotional cycles, loyalty schemes, and restocking behaviour could offer better cues on intent than headline figures. Keep an eye on whether bargain-led activity spikes—if it does, that may echo prior austerity periods, foreshadowing a further pullback in discretionary outlays.
As we navigate this, we suggest interpreting short-term spending data not as directional flags but as expressions of sentiment range-bound by stubborn fundamentals. Time horizons need extending. The effects of monetary policy won’t wash through this consumer environment like they might have in cycles past. Patience is less a virtue here than a necessity.
