Spending on essentials is growing at the fastest pace since the start of the year as prices of petrol, food and energy jump, new figures suggest.
Households across the UK spent 7.2 per cent more in May on essentials, compared to the same time last year, according to Lloyds Bank.
Meanwhile, Britons are scaling back on non-essentials to make ends meet, the analysis of credit and debit card transactions as well as direct debits and standing orders has found.
Households spent 34 per cent more on energy this May compared to last May, when energy prices were much cheaper than they are today.
There has also been a 6 per cent increase in energy spending between April and May this year, as the higher price cap came into effect.
The average person is now spending ?57 per month on energy bills – up from ?47 since the start of the year, according to the report.
This is perhaps unsurprising given the ongoing energy crisis leading to the price cap soaring to ?1,971 with it likely to reach over ?2,000 this October, when it is reviewed.
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Higher petrol prices and a return of cars on the road have also seen drivers spend 30 per cent more on fuel in May compared to last year, while commuters returning to the office have spent 52 per cent more on transport.
Despite food prices rising sharply too over the past year, spending on grocery shopping has increased by just 2 per cent.
However, it must be noted it comes up against strong comparatives with last year, when the UK was just exiting lockdown and people were doing bigger supermarket shops as they were eating at home more often.
At the same time, many are starting to pay attention at how much they spend on food as available finances shrink.
Asda revealed on Thursday that some of its shoppers are asking cashiers to stop scanning items when the till total hits ?30.
Asda’s chairman Lord Rose told the BBC: “What we’re seeing is a massive change in behaviour”, echoing similar comments by Tesco, which last week said they had seen “early signs” of shoppers trading down in products like pasta and bread.
It comes as consumer price inflation rose to 9.1 per cent in May, the highest in 40 years.
Meanwhile, non-essential spending on the likes of holidays and home furniture is still growing, but at the slowest rate since February last year, Lloyds Bank said.
Discretionary spending rose 11 per cent in the year to May, and was up by just 0.6 per cent in the last month.
“People are adapting spending habits as a result of rising fuel and energy costs, as well as demand not being as high compared to May 2021, when shops reopened after restrictions lifted”, the report says.
With the DIY boom experienced last year slowly fading, spending at department stores fell by more than a quarter, spending on electrical items was 22 per cent lower and 8 per cent lower at home stores.
However, people are still eager to take time out to relax, or go on holiday, the figures suggest.
Spending at restaurants and pubs was up almost a third on May of last year, while spending on holidays saw a huge surge, trebling over the period, with people keen to get away after two years of Covid-19 restrictions.
In fact, holiday spending jumped by 9 per cent between April and May this year, suggesting news of flight disruption is not dampening some people’s determination to get away.
Gabby Collins, payments director at Lloyds Bank, said: “We are starting to see early signs that peoples’ spending behaviour is adapting to the increasing cost of living.
“Growth in discretionary spending is tightening, while at the same time annual growth in essential spend is at its fastest rate since the start of 2022.”