According to Barclays, UK consumer spending rebounded in July to a “lipstick effect” and major entertainment events including the Oasis Reunion Tour, encouraging shoppers to splash affordable luxury goods.
The bank tracks 40% of UK card transactions and reports sales rose 1.4% year-on-year last month, recovering from a 0.1% decline in June. Rise is driven by entertainment, clothing, beauty and household goods, although it still lags behind June’s inflation of 3.6%.
Entertainment spending was promoted by Oasis concerts in Cardiff, Manchester and London, as well as ticket sales for other live events. July 10 was the busiest day for entertainment venues, with fans taking the seat for Lewis Capaldi’s 2025 tour.
Movie deals grew 1.6%, thanks to the help of Jurassic World Rebirth, Disney’s Live Lilo & Stitch and Happy Gilmore 2. Subscription services also saw an 8% increase.
Clothing sales soared 4.2%, the fastest since September 2024, with unstable summer weather prompting shoppers to refresh their wardrobe. A quarter of respondents surveyed by Barclays said the mix of warm spells and rainy days this month encouraged the purchase of clothing.
Retail card transactions rose 1.9%, up from 0.2% in June, with discretionary spending climbing 2.4% after strong clothing demand. Spending on essentials fell by 0.7%.
Barclays also noted that the so-called “lipstick effect” often seen in times of economic uncertainty adds to the so-called “lipstick effect” with 9.8% of pharmacies and health and beauty transactions. Furniture sales rose 6.7%, marking eight consecutive months of earnings.
“Summer sales, variable weather and shoppers seeking Feelgood factors have led to a strong July for retailers, especially in beauty, clothing and furniture stores,” said Karen Johnson, head of retail at Barclays.
A separate Barclays study found that 35% of UK adults use artificial intelligence tools such as Chatgpt or Google’s Gemini to help manage their financial situation. In Generation Z (13 to 28 years old), usage has risen to 69%.
These figures are amid the backdrop of slow growth in the UK, with GDP falling 0.3% in April and 0.1% in May on consumer spending and higher savings rates.
The Bank of England cut interest rates to 4% for the fifth time in the year last week, with investors expecting further reductions by up to the end of 2025. Lower interest rates on savings can encourage families to spend more in the coming months.
