More DIY and restaurant trips boosts consumer spending - Barclays

Consumer spending growth accelerated in March, as a recovery in discretionary spending after five months offset declines on fuel and groceries.

Calculated from spending on its UK-issued consumer credit and debit cards, Barclaycard reported 4.6% growth in consumer spending in March compared to the same month last year.

Growth moved slightly above the three-month average of 4.3% as, for the first time in five months, household spending picked up in March to 1.5%.

This was driven primarily by DIY stores, while spending on entertainment was mixed, with the growth coming from restaurants as spending on pubs and cinemas slowed down marginally.

Spending on clothing increased to 1.9%, which Barclays cross asset research team said provided further evidence of a recovery in discretionary spending.

Spending on food and drink, which includes supermarkets and makes up almost a fifth of the overall spending, slowed down to -0.3% in March after seven months of positive growth.

"We believe the slowdown is an anomaly due to the high base effect from Easter related spending happening in March last year compared to April this time around."

The analysts believe the decline in supermarket growth is due to the high base effect caused by Easter falling in March last year compared to April in 2017.

"Therefore the underlying sales growth remains strong with the focus more on rising UK food inflation which increased further in February to 0.9%."

March spending at travel agents jumped to +3.7% from +0.8% in February, albeit against a weaker comparative in March last year. Analysts suggested UK package holidays will take market share from DIY holidays in 2017 "as customers want greater clarity on costs" amid sharp currency moves and inflation.

Online spending continued to grow strongly at 16.9%, well above the three-month average of 15.4%, as in-store spending growth slipped to 0.4%, below the the three-month average of 0.5%.