Consumers Prioritise Holidays Over Basic Necessities
New data has shown a significant change in consumer demands as their priority shifts from procuring and saving up for basic necessities and other essentials to splurging on their summer holiday experiences. As a result, consumers are cutting back on expenses for essential items to save up for their dream vacation.
According to the Barclays consumer spending index released today, although the world is suffering ongoing inflationary pressure, people are preparing to book for holidays later this year.
The sales of travel agencies went up by 16.2% this April as compared to the April of last year due to 18.9% of transactional growth. Due to the rise in demand, the amount of money spent on airlines also saw a rise of 32.1%. This compared with the overall growth of just 4.3% over April last year on card purchases as rising costs continued to place pressure on people’s finances.
Esme Harwood, the director of Barclays, said, “The arrival of slightly warmer weather, along with the Easter bank holiday weekend, led to more Brits venturing outside to enjoy social and leisure activities in April.
“Entertainment received a boost, as music fans rushed to book tickets to the Eurovision Song Contest in Liverpool.
“Meanwhile, Brits are still searching for ways to reduce spend on essentials, so they can enjoy experiences such as holidays, shows and concerts.”
Abbas Khan, the UK economist at Barclays, said, “High inflation continues to squeeze real household disposable incomes and constrain consumption.
“However, this has been somewhat offset by the decline in wholesale energy prices and the price cap on household energy bills, which are contributing to an improvement in consumer confidence.
“The data suggests that pockets of the economy, particularly the leisure sector, enjoyed some renewed momentum in April.
“Going forward, while energy bills are set to fall from Q3, higher mortgage rates cloud the outlook as households continue to refinance at significantly higher rates through the year.”