As the most profitable time of the year approaches for shops and online retailers, two surveys published on Tuesday highlighted the extent of the squeeze on household budgets caused by double-digit inflation in the UK. Barclaycard’s monthly spending snapshot, which accounts for half of debit and credit card transactions, found 50% of consumers planned to tighten their belts this Christmas, cutting back on gifts, food and drink and socializing . Esme Harwood, director of Barclaycard, said: “Rising petrol and supermarket costs continue to hit, but Brits are spending less on energy bills as government support kicks in and people find ways to save at home. Consumers continue to trade long nights for warm evenings as they reduce discretionary spending, while health and beauty and home improvements enjoy a bit of a boost.” Two in three consumers (66%) were finding ways to save energy at home to reduce the cost of their gas and electricity bills, Barclaycard found. Many of them wore more mattresses at home (63%), while 56% avoided using central heating unless absolutely necessary. One in five (20%) had bought an electric blanket or hot water bottle and almost a quarter (23%) were buying or already using an air fryer to help reduce cooking costs. October saw the first payments to consumers under the government’s energy bill support programme, but Harwood said these were unlikely to change sentiment. “With the festive season just around the corner, we are likely to see further cuts as Brits reign in their Christmas spending. Consumers are taking a low-key approach to the holidays, looking for gifts they love and setting spending limits to manage their costs at this traditionally expensive time of year,” he said. Barclaycard said the amount charged to its cards was 3.5% higher in October than a year ago, but said spending was falling in real terms because prices had risen faster. Annual inflation stood at 10.1% in September. Consumer confidence was dented by political and economic uncertainty between the end of September and the end of October, the period covered by her report. The Bank of England has since announced an interest rate hike to 3%, with further economic pain expected next week when Chancellor Jeremy Hunt is expected to use his autumn statement on November 17 to raise taxes and cut spending . The British Retail Consortium (BRC) has urged the government to freeze business rates so retailers avoid passing on higher costs to customers. The BRC-KPMG monthly sales tracker found a small 1.6% increase in the value of goods sold in stores and online was actually a big drop in spending once inflation is taken into account. Paul Martin, UK head of retail at KPMG, said: “This increase is driven by inflationary pressures and does not reflect the true picture of falling sales volumes as consumers buy fewer products per store. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. “Sales in nearly every category both online and in-store declined year over year as consumers adjust to shrinking household incomes.” Helen Dickinson, chief executive of the BRC, said: “Christmas will come later than last year for many and may be more gloom than light as families focus on making ends meet, particularly as mortgage payments rise.” With little sign of cost pressures easing, Dickinson said retailers were looking to the soccer World Cup and Black Friday to boost sales. He added: “Retailers face an additional £800m inflationary rise in their business rates bills next year, so the government will need to freeze rates and reform the broken transitional relief system to ease the cost pressures that are fueling higher prices at a time when people are less able to afford them.”
