Nationwide Spending Report: Rising Costs Take Effect

by | Sep 26, 2022

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  • Nationwide Spending Report reveals fall in spending across essential and non-essential items in August
  • Spending on debt rises month-on-month and annually, as does the amount spent on rent payments
  • Recent trend of falling spend on DIY, dating, subscriptions and gardening continues as consumers cut costs
  • But spend on socialising and leisure1 still rising despite cost pressures, accounting for a quarter of all non-essential spending

Households reined in spending during August as the realities of rising costs took their toll on what is traditionally one of the biggest months of the year for spending, the latest Nationwide Spending Report shows.

But it also reveals the nation has not yet given up going out as spending continues to rise for eating and drinking and leisure and recreation, accounting for one in every four pounds spent on non-essentials.

Nationwide Building Society’s latest Spending Report2 – which provides an overview of members’ debit card, credit card and Direct Debit spend – shows both essential and non-essential spending dipped.

Overall spending in August totalled just over £8.3 billion. This was down one per cent compared to July, with annual growth down to eight per cent (from 11% last month). A total of just over 227.5 million transactions were made in August – a fall of one per cent on the number made by members against the previous month. Annual growth in transaction numbers in August was eight per cent – a sharp drop on the 13 per cent recorded in July.

Essential spending snapshot: There was more than £3.8 billion of essential spending in August, which was down very slightly (-1%) on July. However, it was up 12 per cent year-on-year. Spending to pay down debt in August was up month-on-month (+4%) and annually (+18%) as people who have turned to credit cards, for example, look to pay off their previous spending. Expenditure on rent payments has increased compared to last year (+17% vs August) and compared to last month (+7% vs July).

The average transaction value for rent payments is £276.113, which is nine per cent higher than August last year. In supermarkets, although the number of transactions in August was up 11 per cent from last year, spending is only up six per cent. In fact, month-on-month, both the number of transactions and amount spent in supermarkets was down four per cent in July. With the school summer holiday season being in full swing, spending on childcare in August naturally fell compared to July, by 52 per cent. Despite this, childcare spending was actually 39 per cent higher than in August last year – perhaps reflective of the current higher cost of childcare.

Non-essential spending snapshot: August saw a slight drop (-1%) in non-essential spending, although it remained close to £3 billion and eight per cent higher than 12 months previously. The number of non-essential transactions remained broadly flat month-on-month, but seven per cent higher than last year. Continuing a trend that has been seen previously, spending on dating, DIY, gardening and subscriptions continues to see cutbacks with all four categories seeing a drop in spending compared to both last month and last year. However, in a nod to trying to enjoy life, there continues to be growth in spending in areas like eating and drinking out (+4% vs July +8% vs August 2021) and leisure and recreation (+6% vs July; +3% vs August 2021). Although digital goods only saw a one per cent month-on-month growth in spending, it was actually 21 per cent higher than last year, with console games accounting for a large percentage of that spend.

Mark Nalder, Head of Payments at Nationwide Building Society, said: “As inflation continues to bite and we edge ever closer to a winter of rising bills, it’s perhaps no surprise to see spending starting to taper, particularly for non-essentials, where we’ve seen annual growth fall significantly from 14 per cent in July to just eight per cent in August.

“The continued drop in discretionary spending on areas such as DIY, gardening and subscriptions suggest people are reviewing what they can live without or can reduce. However, it’s clear from our latest data that many households are attempting to balance saving money with continuing to live and enjoy life. This is evidenced by the fact that spending on socialising and leisure continues to grow, accounting for around one in every four pounds spent on non-essentials in August. The fine weather and holiday season clearly contributed to this as people went out and enjoyed themselves. However, as autumn sets in, we expect households to react more acutely as people prepare themselves for increased energy bills and the Christmas period.”

Essential spend overview

  • Childcare: Childcare spending fell 52 per cent month-on-month as parents look to spend time with their family during the school holidays. However, the total amount spent on childcare is 39 per cent higher than August 2021, perhaps reflective of the current spiralling costs of childcare4.
  • Debt: The amount spent to pay off debts, such as on credit cards and personal loans, continues to increase. Expenditure is 18 per cent higher than August last year, and up four per cent month-on-month. This has largely been driven by people using credit cards to deal with the rising cost of living, as well as those paying off previous debt. The average debt transaction was £203.20 – an increase of seven per cent on last year.
  • Rent payments: Spending on rent has seen an increase both compared to July (+7%) and last year (+17%), likely as a result of rent rises nationally5. The average transaction value for rent payments (which factors in those who pay weekly and monthly) was up nine per cent from last year to £276.113.
  • Supermarkets: August saw a drop in both the number of transactions (-4%) and spending (-4%) in supermarkets compared to July. The average transaction value of £17.79 is also down slightly in July (-1%). Despite the drop, overall supermarket spending is up six per cent from August last year, reflecting rising food and drink prices.
  • Fuel: There was a five per cent fall month-on-month in spending in August on fuel and electric car charging, which can perhaps be attributed to a combination of falling fuel prices and a reduction in the use of motor vehicles. The average transaction value of £30.60 is also three per cent down on last month. But, in a nod to where fuel prices are compared to this time last year, spending is up by nearly a quarter (24%) on August 2021.

ESSENTIAL SPEND (August 2022)

ESSENTIAL SPEND (August 2022)

Non-essential spend overview

  • Eating and drinking: Spending on eating and drinking out continues to grow as people look to continue trying to enjoy their life and the summer sunshine to socialise with family, friends and colleagues. There was a four per cent jump compared to July and eight per cent annual growth. Total spending on eating and drinking out accounts for nearly a fifth (19%) of all non-essential spending.
  • Leisure and recreation: There has been a six per cent month-on-month increase in leisure and recreation (+3% versus last August) as people enjoy the good weather to play sports, go to the gym and get in the swimming pool.
  • Digital goods: Although there was only one per cent growth in spending on digital goods month-on-month, total spending was more than a fifth (21%) higher than in August last year, largely driven by purchases of console games.
  • Dating: Spending was down five per cent in July and down nine per cent in August last year.
  • DIY: There was a one per cent fall in spending compared to July (-7% versus August 2021).
  • Gardening: Overall spending was down eight per cent on August 2021, and down nine per cent month-on-month.
  • Subscriptions: Spending was down one per cent versus July and down two per cent on August 2021.

 

NON-ESSENTIAL SPEND (August 2022)

NON-ESSENTIAL SPEND (August 2022)

Ways to pay:

The overall drop in spending is a result of the month-on-month fall in spending on both debit and credit cards. Even with this fall, spending on credit cards in August is still up 10 per cent from last year. Spending via Direct Debit continues to rise, with a five per cent month-on-month growth and a 14 per cent increase compared to last year. This has been largely driven by the increase in Direct Debits set up to make regular payments to credit cards.

WAYS TO PAY (August 2022)

WAYS TO PAY (August 2022)

Nationwide cost-of-living support:

In August, Nationwide Building Society launched a freephone hotline to support members struggling with the rising cost-of-living. Members can speak to a dedicated team of trained experts based across the Society’s main branches. The service is available from 9am-4.30pm weekdays and 9am-12pm Saturdays. Nationwide aims to answer calls to the hotline within ten minutes. Outbound calls will also be made and, in October, Nationwide’s cost-of-living experts will be able to offer face-to-face, telephone and video appointments. The Society also encourages anyone in financial hardship should contact their bank or building society for support.

See more at Cost of living | Nationwide.

 

 

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