Consumer card spending may have declined marginally (-0.2%) year-on-year in 2025, marked by “careful and considered budgeting” but at least confidence in household finances “consistently exceeded confidence in the economy” and a love of treats helped the beauty sector sparkle.

That’s according to the latest Barclays Consumer Spend performance report that showing some non-essential categories, such as beauty, travel and entertainment, bucked the general trend, “as shoppers once again prioritised affordable treats and experiences that bring them joy”.

The data reveals that essential spending declined 2.3% in 2025, down from 0.9% growth in 2024. But non-essential spending increased marginally, (+0.8%), but still lagged the Consumer Prices Index’s 3.8%.

So what were some the major trends that shaped consumer behaviour last year?

First, confidence in the UK economy remained low, with a monthly average of just one in four adults (24%) feeling confident in the nation’s economic strength. In October, all seven measures of consumer and economic confidence tracked by Barclays declined for the first time since August 2022, when the Bank of England announced its biggest base rate increase in 27 years.

However, supported by prudent budgeting, at year-end, the majority remain confident in their household finances (64%) and their ability to spend on non-essentials (52%), although both measures declined since January (from 70% and 56%, respectively).

Linked to this confidence in discretionary spending, consumers found room in their budgets for experiences and “feelgood” purchases in 2025. Almost half (44%) of consumers say they liked to treat themselves regularly, but were finding ways to do so on a budget, which led to categories such as pharmacy, health & beauty (9.5%) receiving a particular boost.

It was 2025’s strongest-performing category and saw double-digit growth in several months of 2025, marking close to five years (56 months) of consistent growth.

Those spending on the category spent £324 each on average, up from £291 in 2024, as the ‘lipstick effect’ (when consumers buy small, affordable luxuries as a pick-me-up) persisted, while 71% of consumers also said they’ve invested in wellness in the last 12 months. 

Earlier in 2025, Barclays also chronicled the rise of male beauty spending, revealing 19% of men now care more about beauty than they did 10 years ago, “further contributing to the category’s success”. And 25% of men have now incorporated skincare into their daily routine, while 12% have spent money on a cosmetic procedure.

AI growth

Next, we have artificial intelligence (AI). Over a third (35%) of consumers, and 70% of Gen Z, have used AI tools in the last year for budgeting, planning, and shopping.

Of the 65% who are yet to make use of AI, 50% prefer to manage things without the help of tech, 42% don’t trust AI and 30% have privacy and data concerns.

The growth of AI is also “transforming how people approach sales” as 37% of shoppers said they would use AI during their Christmas shopping, rising to 53% for those aged 18-34. This group is also turning to AI to research products (43%), compare prices and deals (34%), generate gift ideas (31%) and set up personalised alerts (25%).

Meanwhile, cost of living pressures led to a widespread adoption of budgeting strategies, with nearly 64% of consumers “consistently looking for ways to get more value from, or reduce the cost of, their weekly shop”. Meanwhile 50% are making the effort to cut back on discretionary spending.

Consumers’ price sensitivity also meant there was a continued focus by manufacturers and retailers on tactics such as ‘skimpflation’ (57%), where the quality of certain products or ingredients declines. Three-quarters (76%) reported concern about shrinkflation.

Karen Johnson, head of Retail at Barclays, said: “While confidence in the UK economy has declined, UK households’ confidence in their ability to manage their money has remained strong, translating into the resilient performance of categories such as travel, entertainment and beauty. It is encouraging to see that through purposeful spending, consumers continue to prioritise the things that bring them joy, unlocking the potential for UK economic growth.”