UK consumer spending continues to grow
Total spending was driven by spending on groceries, petrol and clothing, all of which reached in-year highs as Brits enjoyed more outdoor activities with the arrival of summer.
The increasing spend follows impressive figures for May (4.1%) and June (4.9%) and means that growth in consumer spending has now exceeded the rate of inflation for fourth months in a row; the first time it's done so for 3 years.
A "feel-good factor" arising from the UK's recent sports successes, the birth of Prince George and Britain's first prolonged heatwave in seven years also had an impact on spending. According to Barclaycard, which processes nearly half of all card transactions in the UK, pubs saw significant year-over-year spend growth of 10.8% in July.
The arrival of summer also encouraged consumers to get out onto the high street, with in-store spend growing at its highest rate all year at the expense of online spend. Spending in stores grew by 4.0% year-on-year, the highest since the beginning of 2012, whereas online sales increased by 8.5% (vs. 12.5% in June 2013). It's only the third time in the past 19 months that online spend growth fell into single digits.
"The UK's economic recovery truly gained pace in July when, for the first time in three years, consumer spending exceeded the rate of inflation for four months in a row, showing that the long-awaited consumer-led recovery has arrived. It's an undeniable vote of confidence in the future by British shoppers and shows that they're finally shaking off the longest period of austerity in a generation and are more readily parting with their money;" said Val Soranno Keating, chief executive of Barclaycard. ■