Barclaycard’s latest consumer card spending data has revealed the negative impact of the cost of living crisis on international travel.
The report, which looks at consumer spending from July 23 – August 19, 2022, found that domestic travel sector performed strongly, with summer staycations boosting hotels, resorts and accommodation by 4.1 per cent month-on-month.
International travel, however, has been more heavily impacted by inflation. The report found that travel agents and airlines declined by 5 per cent and 2.6 per cent respectively, which it suggests could be due to holidaymakers “booking travel earlier in the year and those booking last-minute trips choosing to cut back on getaways abroad”.
The report added:
“While the summer holidays boosted spending on hospitality and domestic travel, overall card spending declined -1.9 per cent month-on-month, as consumers become more selective with discretionary purchases to ensure they can afford rising household bills.”
Meanwhile, spend on fuel rose 23.9 per cent, marking its lowest growth in 12 months. Barclaycard found that more than 1 in 10 (13 per cent) workers are choosing to walk or cycle to work instead of driving due to rising fuel costs, with 11 per cent commuting by public transport.
The report also found that Brits’ confidence in their ability to spend on non-essential items has fallen to 48 per cent – lower than both July 2022 (54 per cent) and August 2021 (63 per cent).
Optimism in the UK economy has also declined to 21 per cent, compared to 26 per cent in July 2022 and 37 per cent in August 2021. This marks its lowest since August 2020 (19 per cent).
The energy price increase in October is also impacting consumers’ spending behaviours, with 32 per cent planning to cut down on discretionary spending to afford bills during the autumn and winter months. The data showed that 82 per cent believe the cost-of-living will continue to rise, while 20 per cent believe that increasing costs are having a negative impact on their mental health.
The report added:
“Despite the challenging outlook and ongoing headwinds, 60 per cent of consumers remain confident in their household finances, albeit down on last month’s 66 per cent. This relative stability may be owing to changes many have made to their spending behaviour to offset rising costs (26 per cent) in preparation for the months ahead.
José Carvalho, head of consumer products at Barclaycard, commented:
“The cost-of-living is clearly leading Brits to cut-back on some non-essential purchases to ensure they can afford the increasing costs of their weekly grocery shop and household utility bills. Yet, despite these inflationary pressures, consumers have still been keen to enjoy the summer weather by eating and drinking out and going on staycations with friends and family.
“However, an energy price rise on the horizon means the majority are understandably very concerned about whether their finances can stretch far enough to afford rising household bills. Many Brits plan to continue cutting back on their discretionary spending during the autumn and winter, while adopting a resourceful approach to saving money in order to weather a challenging period ahead.”
See the full report here.