Cost of living squeeze starts to impact international travel, Barclaycard reveals

Foreign travel faced the impact of the cost of living squeeze in August, according to latest consumer card spending data.

The domestic travel sector performed strongly, with summer staycations boosting hotels, resorts and accommodation by 4.1% month-on-month.

But international travel was more heavily impacted by rising costs, with travel agents and airlines declining 5% and 2.6% respectively, data from Barclaycard revealed.

This was “possibly due to holidaymakers booking breaks earlier in the year and those booking last-minute trips choosing to cut back on getaways abroad”.

Barclaycard added: “While the summer holidays boosted spending on hospitality and domestic travel, overall card spending declined 1.9% month-on-month, as consumers become more selective with discretionary purchases to ensure they can afford rising household bills.

“As the cost-of-living continues to bite, Brits’ confidence in their ability to spend on non-essential items has fallen to 48% – noticeably lower than July 2022 (54%) and August 2021 (63%).

“Optimism in the UK economy has also declined to 21%, down from 26% last month and 37% in August 2021; its lowest since August 2020 (19%).”

The energy price increase in October is also weighing on consumers’ minds, with 32% planning to cut down on discretionary spending to afford energy bills during the autumn and winter and 21% reporting they can no longer afford small luxuries as a ‘pick-me-up’.

The report added: “Many feel the worst is yet to come, as 82% believe the cost-of-living will continue to rise, while 20% cite increasing costs as having a negative impact on their mental health.

“Despite the challenging outlook and ongoing headwinds, 60% of consumers remain confident in their household finances, albeit down on last month’s 66%.

“This relative stability may be owing to changes many have made to their spending behaviour to offset rising costs (26%) in preparation for the months ahead.”

Barclaycard head of consumer products Jose Carvalho said: “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.”

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