UK consumers are cutting back on travel for the first time in five years, as rising living costs and the ongoing conflict in Iran weigh on household finances and confidence.
New data from Barclays shows overall consumer card spending rose by just 0.9% year on year in March, down slightly from 1% in February, signalling a slowdown in economic activity.
Spending on travel dropped by 3.3% in March, marking the first annual decline since March 2021. The figures suggest many households are postponing trips abroad or opting for more affordable domestic holidays.
Expenditure fell across key travel sectors, including travel agents, airlines and public transport. However, spending on hotels and accommodation edged up by 1.2%, reflecting increased demand for UK-based breaks, particularly during the Easter period.
The ongoing conflict in the Middle East has added to financial uncertainty, prompting many consumers to rethink their spending habits. Around one in seven adults said they had delayed major purchases or increased savings in anticipation of rising energy costs.
Although the UK energy price cap fell by 7% in April, forecasts suggest bills could rise sharply again in July, with an expected increase of around 18% driven by higher wholesale energy prices.
Spending on essential goods, including food and fuel, rose by 0.5% in March. Fuel spending in particular increased by 1.6%, marking the first rise since early 2023 as global oil prices climbed.
Meanwhile, discretionary spending growth slowed to 1.1%, although some sectors remained resilient. Consumers continued to spend on clothing and entertainment, with cinema sales rising by 5.5% following strong box office releases.
Despite ongoing pressures, most consumers remain confident in their personal finances, with a majority saying they can manage their household budgets. However, confidence in the wider UK and global economy has declined, reflecting growing uncertainty.
Economists warn that cautious consumer behaviour could lead to weaker economic growth in the months ahead, particularly as households prioritise savings over large purchases.
Separate figures from the British Retail Consortium indicate that retail sales grew by 3.6% year on year in March, driven largely by strong food sales during the early Easter period.
However, non-food categories showed mixed results, with demand holding up for items such as electronics and homeware, while clothing and footwear sales remained under pressure.
Analysts suggest the Bank of England may face a difficult balancing act as it weighs slowing economic activity against persistent inflation risks.
With energy prices expected to rise again and global tensions continuing, UK households are likely to remain cautious, carefully balancing essential spending with discretionary purchases — and increasingly rethinking travel plans.