In the midst of a cost of living crisis, Britons are making distinct choices about where to allocate their discretionary spending, opting for digital content subscriptions over dining out.
Recent analysis by Barclays reveals a notable increase in spending on streaming platforms like Netflix, even as concerns about rising housing costs persist.
The allure of binge-worthy shows like “Baby Reindeer” and “Ripley” on Netflix has spurred a surge in subscription spending, further fueled by recent fee hikes and measures to curb password sharing. Consequently, spending on digital content and subscriptions saw a remarkable uptick of about 10% in April. In contrast, dining out experienced a downturn, with restaurant spending declining by 13% during the same period.
Rising housing costs remain a pressing concern for many consumers, with spending on mortgages and rent witnessing a 3.6% increase in April compared to the previous year. This uptick, though below peak levels seen in 2023, marks a reversal of the declining trend observed earlier in the year.
While optimism about potential interest rate cuts persists, uncertainty looms due to stubborn inflation and robust employment levels. Consequently, lenders have begun to adjust their rates, with the average rate for a two-year fixed mortgage exceeding 6% for the first time since November.
Despite these challenges, the majority of consumers express confidence in their ability to manage their bills, with only a small fraction unsure about their financial stability. However, overall retail sales experienced a 4% decline in April, attributed in part to unfavorable weather conditions and the timing of Easter.
Food sales, while still showing growth, saw a significant slowdown compared to the previous year, reflecting consumers’ cautious spending habits. Conversely, non-food sales, including clothing and household appliances, experienced a notable decline, further highlighting the shifting consumer preferences amidst economic uncertainties.
Looking ahead, retailers are hopeful for improved sales during the summer months, anticipating increased consumer spending as social events resume. Additionally, the prospect of interest rate cuts could potentially boost consumer confidence, providing a much-needed stimulus to retail sectors impacted by the current economic climate.
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TV streaming services like Netflix now essential expense for many despite cost of living crisis
