Non-essential spending in the UK in July returned to levels seen a year before as the coronavirus lockdown eased, the latest spending data from Lloyds Bank (LLOY.L) shows.
Levels of essential spending fell dramatically in April, down 41% year on year, as the lockdown was in full swing.
Spending then recovered to pre-COVID-19 growth levels in June, and continued to rise in July, up 2% year on year.
However, the coronavirus pandemic has significantly impacted spending patterns in the UK. Spending at home stores and electrical stores were up 41% and 37% respectively, compared to July last year, as more people continue to spend more time at home and work remotely.
Spending on home services, including gardeners and cleaners, is up 15% compared to 2019, a considerable uplift since the 40% drop seen in April this year.
Consumer spending in restaurants rose in July as eateries began re-opening after the lockdown. Although card spending was still 12% down year on year in July, this marked a significant improvement from June which was down 51% compared to last year.
Lloyd’s pointed to the government’s “Eat Out to Help Out” scheme, in which diners get a 50% discount at participating restaurants and pubs on Mondays, Tuesdays and Wednesdays throughout August, as a factor that could further increase restaurant spending in August.
People have also been spending more on travel and trips away as lockdown restrictions eased allowing people to take ‘staycations’ within the UK and international travel began to open up again. Though spending on holidays remained 65% lower compared to July 2019, this was an improvement on the 92% fall recorded in June.
Essential spending increased 2% in July year on year, having increased by a similar amount in June.
Spending on commuting was down 54% in July, an uptick on the 73% fall seen in June, as some employees began to return to their workplaces. Similarly, spending on fuel also rose in July, down 19% year on year, compared to 31% in June.
Spending on food and drink increased by 22% in July, slightly down on the 26% increase in June.
Gabby Collins, Head of Payments, Lloyds Bank said: “Consumer spending has been forced to change as a result of the pandemic, impacting how we live, work, socialise and travel. Whilst it’s encouraging that non-essential spending is now back in line with the same time last year, it’s a step too far to say this is the moment the UK economy went ‘back to normal’.
“Yet, early signs for August point to further increases in the amount spent across the UK on non-essentials hit particularly hard by lockdown. Initiatives like the government’s “Eat Out to Help Out” scheme have tempted people back to high-street stores and restaurants so far, and many will be hoping this momentum can be carried through the Autumn.”