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Creditfix LB 03-2017

Consumer Spending Up for Second Month in a Row

UK consumer spending rose in June for the second month in a row, marking the first back-to-back increases for over a year.

The latest data released by card payment company Visa has shown that inflation-adjusted spending on its credit and debit cards was 0.7 percent higher than in June last year.

It is felt that the unusually hot weather and England’s success in the football world cup has led to particularly strong increases in spending in restaurants and bars, as consumers enjoy the sunshine and football tournament.

In fact, Visa confirmed that spending in shops and retail establishments grew more quickly than online shopping for the second month in a row, the first time that has happened since 2012.

After a weak start to 2018 it seems that the UK economy grew more strongly in the second quarter, following the Bank of England’s decision to hold interest rates steady. Most experts expect them to raise the base rate again in August.

The rise in retail sales is also likely to reflect growing optimism amongst shoppers as inflation weakens and wages grow slightly more quickly, a welcome relief for many traditional retailers who have been struggling to compete with the internet revolution.

The latest consumer confidence survey by accountancy firm Deloitte also showed optimism among UK consumers, hitting its highest level since first launched in 2011.

Ian Stewart, chief economist at Deloitte, said: ‘UK consumers are increasingly confident about opportunities in the jobs market and the security of work. With the unemployment rate at a 43-year low and skills shortages on the rise, the stage looks set for gains in real wages.’

Even though football turned out not to be coming home, it seems that consumers were staying out as well, with the increase in their spending coming as a great relief to the high street.

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