Card spending falls in December, but consumer and economic confidence show signs of recovery

Growth in consumer card spending decreased –1.7 per cent year-on-year in December, a further decline from November (-1.1 per cent) and considerably less than the latest CPIH inflation rate of 3.5 per cent. It marked the greatest annual fall in spending since February 2021 (-9.5 per cent), as consumers continue to combat rising costs by making and planning cutbacks.

Consumer confidence showed signs of recovery, with confidence in household finances rising to 66 per cent (up from 64 per cent in November and 63 per cent in October) albeit below 2025’s average of 70 per cent. Similarly, consumers are regaining confidence in their job security and ability to spend on non-essentials, which both improved three percentage points month-on-month, to 46 per cent and 55 per cent respectively. Confidence in the UK economy grew to 24 per cent, after remaining subdued at 22 per cent in both October and November.

Inflation concerns endure as shoppers prioritise cutbacks

Despite improving consumer confidence, food price and general inflation concerns both increased in December, to 86 per cent and 85 per cent respectively (from 84 per cent and 83 per cent in November). Two in three (64 per cent) say they plan to cut spending on groceries in 2026, and of this group, three in five (59 per cent) say they will make use of loyalty schemes, 52 per cent will shop at budget supermarkets and 46 per cent will buy own-brand products.

Over half (56 per cent) intend to reduce discretionary spending, with clothes/accessories (48 per cent) and restaurant meals (47 per cent) emerging as the top cutbacks, which comes as non-essential spending saw its greatest decline since February 2021 in December, down -1.3 per cent.

Pubs and home purchases prove popular

Pub spending returned to growth in December, up 1.9 per cent, after three consecutive months of decline. Festive socialising was a significant contributor, with transaction volumes spiking on 13^th and 20^th December, the two Saturdays before Christmas.

Amid the growing popularity of Dry January, half (50 per cent) say they’re planning a quieter January with fewer social plans, rising to 56 per cent for those aged 18-34. Two in five (40 per cent) report limiting socialising due to costs, as 39 per cent overall say the expense prevents them from going out as often as they would like to.

Spending on entertainment was flat in the month, at 1.0 per cent, however digital content & subscriptions saw growth of 7.8 per cent, helped by follow ups to popular streaming series such as Stranger Things and Emily in Paris, as viewers sheltered from the cold.

Overall retail spending saw its greatest year-on-year decline since November 2024, down -1.9 per cent. Both garden centres (2.5 per cent) and food & drink specialist stores (2.9 per cent) bucked the trend however, continuing their strong performance through to the end of 2025.

Financial and physical health in focus for 2026

More than half (55 per cent) of UK consumers say they will focus more on their wellbeing in 2026, while 51 per cent are setting a New Year’s goal or resolution. Of this group, one in three (35 per cent) are setting a health/fitness-related goal, with a similar proportion (33 per cent) setting a financial goal.

For those with a financial resolution, the most popular goals include saving more each month (47 per cent), sticking to a budget (39 per cent) and spending less on eating and drinking out (30 per cent). Those with a health resolution listed drinking more water (52 per cent), swapping processed for whole foods (45 per cent) and trying to improve their sleep (45 per cent) among their top goals.

Karen Johnson, Head of Retail at Barclays, said: “Despite there being encouraging signs that consumer confidence is recovering, shoppers will undoubtedly pay increasing attention to value for money in 2026, as many look to loyalty schemes and budget supermarkets. Meanwhile the New Year has brought with it a renewed focus on both financial and physical wellbeing, which will result in more considered and conscientious spending. Wellness, beauty and fitness will all benefit from this shift in priorities in 2026 and beyond.”

Jack Meaning, Chief UK Economist at Barclays said: “These numbers suggest 2025 ended with a whimper, following the slowdown we saw define last year. However, we expect inflation to ease significantly in the first half of 2026, which, alongside a further easing of interest rates, should provide consumers with respite, unlocking real spending power. If the tentative signs of improving confidence can last beyond the New Year, then UK activity could strengthen as the year goes on.”