UK consumer spending rebounded in July as the “lipstick effect” and major entertainment events, including the Oasis reunion tour, encouraged shoppers to splash out on affordable luxuries, according to Barclays.
The bank, which tracks 40% of UK card transactions, reported that sales increased 1.4% year-on-year last month, recovering from a 0.1% decline in June. The rise was driven by entertainment, clothing, beauty and homewares, although it still lagged behind June’s inflation rate of 3.6%.
Entertainment spending was buoyed by Oasis concerts in Cardiff, Manchester and London, as well as strong ticket sales for other live events. July 10 marked the busiest day for entertainment purchases as fans snapped up seats for Lewis Capaldi’s 2025 tour.
Cinema transactions rose 1.6%, helped by the release of Jurassic World Rebirth, Disney’s live-action Lilo & Stitch, and Happy Gilmore 2. Subscription services also saw an 8% jump.
Clothing sales surged 4.2%, the fastest pace since September 2024, with unsettled summer weather prompting shoppers to refresh their wardrobes. A quarter of respondents to Barclays’ survey said the month’s mix of warm spells and rainy days encouraged clothing purchases.
Retail card transactions rose 1.9%, up from June’s 0.2%, with discretionary spending climbing 2.4% on the back of strong clothing demand. Spending on essentials fell 0.7%.
Barclays also noted an increase in small luxury beauty purchases — the so-called “lipstick effect” often seen in times of economic uncertainty — with pharmacy and health and beauty transactions up 9.8%. Furniture sales grew 6.7%, marking eight consecutive months of gains.
Karen Johnson, head of retail at Barclays, said: “The summer sales, changeable weather and shoppers seeking the feelgood factor led to a strong July for retailers, particularly among beauty, clothing and furniture stores.”
Separate Barclays research found that 35% of UK adults have used AI tools such as ChatGPT or Google’s Gemini to help manage their finances. Among Gen Z – those aged 13 to 28 – usage rose to 69%.
The figures come against a backdrop of sluggish UK growth, with GDP down 0.3% in April and 0.1% in May amid weak consumer spending and high saving rates.
The Bank of England last week cut interest rates for the fifth time in a year to 4% from 4.25%, and investors expect at most one further reduction before the end of 2025. Lower rates on savings could encourage households to spend more in the months ahead.
