How Our Spending Has Changed Since The End Of Coronavirus (covid-19) Restrictions

12th July 2022

Online shopping, hobbies and habits — the coronavirus (COVID-19) pandemic has had a huge impact on where our money goes. As the cost-of-living increases, we look at what has happened recently to retail and the story behind our financial transactions.

Shopping online became the norm during the coronavirus pandemic, but for some sectors, the sharp shift towards online purchases may be more lasting.

Despite restrictions easing and people returning to the shops, there are some things we're buying online more, notably in the categories of "clothing", "electrical household appliances", and "sports equipment, games and toys".

Inflation and the cost-of-living are also causing people to reduce their delayable expenditure and how much food they are buying.

Online spending high but falling
Overall, we're still spending substantially more online than before the coronavirus pandemic. In May 2022, seasonally adjusted internet sales accounted for 26.6% of all official retail sales, compared with 19.7% in February 2020.

Although online shopping has been a growing behaviour over several years, the pandemic appears to have accelerated the trend.

However, in recent months, we have started shifting back towards shopping in store, although spending online remains high.

Online spending has dropped in recent months

Online shopping for sports equipment, and other hobbies
As well as affecting pounds spent, the pandemic appears to have changed our habits when it comes to buying more online - particularly in some sectors.

Some of the changes in sector spending may be owing to people taking up hobbies, well-being activities or lifestyle changes during lockdowns.

Gardening items, such as flowers, plants, seeds, fertilisers, and pets and pet food have also shifted online, and we are buying more of them than in 2019. However, this category is a small component of our official retail data and that means a small change will cause the trend to move around more than it would in larger categories.

The same shift to online is true of "sports equipment, games and toys", which still has spending higher than before the pandemic.

In recent months, people have cut back on food shopping as a result of the cost-of-living crisis. When asked about their shopping habits in the past two weeks, around half (49%) of adults reported that they were buying less food when food shopping and 48% of adults reported they had to spend more than usual to get what they normally buy, according to our Opinions and Lifestyle Survey. Although the amount we are buying in food stores has dropped, the percentage of food spending online is still higher than before the coronavirus pandemic.

Clothing has seen an acceleration towards online spending, although it is not clear how permanent these trends will be in future. Retail volumes in May 2022 were only just above what they were in 2019, so that, despite large drops during restrictions, there has not been a rebound in how many clothes we are buying.

Delayed purchases and rising costs
Retail spending, in pounds through checkouts, has largely recovered compared with pre-pandemic levels, but the cost of living is having an impact on transactions and how much we are buying in volumes.

This means that, while overall the amount we are spending is now above what it was pre-pandemic, this is largely owing to rising prices rather than the number of purchases.

In May 2022, our retail spending was 13% higher than in February 2020, but retail volumes were only up by 2.6%.

Rising prices have led to changes in behaviour. In this last week, 62% of adults said they had reduced spending on non-essentials as a result of the cost-of-living crisis, according to our Opinions and Lifestyle Survey.

Looking at card transaction data, we can see other signs of how inflation is affecting our spending.

Daily payments made by credit and debit card processors to around 100 major UK retailers go through the high value CHAPS payment system. Experimental data track these payments by type of transaction, whether online or in store.

"Delayable" spending, that is, clothing and footwear, vehicle purchases and household goods, has dipped in the most recent month; but it was already well below what it was in February 2020.

Since May 2020, expenditure on "staples" (food and drink, communication and utilities) has consistently remained above the February 2020 average, with seasonal peaks at Christmas.

Social spending (including travel and eating out) plummeted during the pandemic and recovered as restrictions have eased, but is now going back down again.

These trends are also borne out in more detail in Revolut data. Spending on fuel has risen continuously since the beginning of the year, as a result of wide-scale fuel price increases.

Entertainment spending, on the other hand, has dropped in recent weeks following a steady rise since July 2020. However, it is too soon to say whether this recent drop in entertainment spending is a direct result of the cost-of-living and people potentially substituting expenditure to other essential categories.

The category for entertainment consists of non-essential goods and services and includes activities such as "theatrical producers and ticket agencies", "betting", and "membership clubs", including sports and gyms.

As Revolut users are typically younger and more metropolitan, it is likely that this has an impact on overall figures for each category.

Looking at longer term trends, spending on travel and accommodation as well as pubs, restaurants and fast food (including takeaways), was heavily impacted by coronavirus restrictions, and has recovered slowly to pre-pandemic levels. As with other sources, any recent rise in spending is likely to be a reflection of rising prices rather than purchases.

Older age groups are spending less
Analysis of more Revolut spending data suggests that people aged 55 years and older reduced spending at the start of the pandemic more than younger age groups.

This may be because those aged 55 years and over would have typically been more affected by health concerns and a larger proportion of people in this age bracket would have been advised to shield during restrictions. After this initial reduction, trends broadly matched between age bands.

However, more recently, we have seen higher growth in spending for those aged 55 years and over compared with other age groups. This could potentially indicate a build-up of involuntary savings during the restrictions period.

Revolut is a newer source of spending data and its users are typically younger and more metropolitan than the population as a whole. Analysis is done on a per-account basis to adjust for the consumer base growing over time.

Those aged over 55 years saw lower levels of spending compared to younger age groups at the start of the pandemic, but higher spending growth in recent months.

Note
The above are extracts from a report by the Office for National Statistics. To read it in full with many links and graphs go HERE