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British consumers spent more on shopping in January but confidence was fading quickly, figures released on 5 February showed, indicating shoppers were eager to secure a bargain before tightening the purse strings in 2016.
According to research carried out by Barclaycard, which processes nearly half of all credit and debit card transactions in the UK, consumer spending rose 3.8% in January, continuing the strong run of growth in 2015, as retailers cut prices during the traditional sale period.
Department stores – typically big discounters at the start of the year – and furniture shops recorded their strongest increase on record, gaining 12.6% and 11.3% respectively, while the belated arrival of cold weather saw clothing spend grow 6.7%.
"January spending provided a welcome boost to retail sales with consumers taking advantage of steep discounts in the post-Christmas period to buy big-ticket items such as furniture or white goods," said Barclaycard managing director Paul Lockstone.
However, the report found that consumer confidence in personal finances plunged from 34% in December to 24% in January, with 29% of consumers now expecting the UK economy to deteriorate in the next three months compared with 18% in December, while the proportion of people who expect the global economy to deteriorate over the next three months surged from 22% in December to 42% in January.
As a result, consumers are more pessimistic about their own situation, Barclaycard added, indicating just 45% of people feel confident in their job security, down from 52% in December and the lowest since Barclaycard's consumer confidence research began.
The report added 2016 will see consumers continue to adopt a cautious approach to spending, with only 23% of respondents expecting to complete an expensive purchase compared with 34% in December
Despite concerns over the economy, however, results show that some shoppers still intend to find a way to purchase the "nice-to-haves", regardless of how the economy fares in 2016, with 40% still expecting to treat themselves or their family this year.
"Consumers will continue to place value for money front and centre when making purchasing decisions – they are willing to spend, but on their own terms," added Lockstone.