CONSUMER SPENDING RISES 1.6 PER CENT DESPITE BREXIT VOTE AS DOOMMONGERS DUMBFOUNDED
Households made the most of the warmer weather in July by spending more on new clothes, meals out and day trips, a report has found. Despite the economic uncertainty following the vote to leave the EU, spending increased by 1.6% year-on-year in July, according to the Visa UK Consumer Spending Index.
While the 1.6% rate of increase is up on a 0.9% annual rise in June, it is still weaker than the rates of increase seen at the start of the year, Visa said.
Kevin Jenkins, UK and Ireland managing director at Visa, said: “July’s data suggests that UK consumer spending is holding up despite the ongoing uncertainty following the referendum, albeit at lower levels of growth than we’ve seen in the last couple of years.
“Looking at the last three months, the index indicates that consumers remain cautious with their spending. Overall growth is hovering nearly one percentage point below the average seen over the past two years.”
Hotels, restaurants and bars recorded an annual growth rate of 8.9% in consumer spending. Recreation and culture saw a 5.2% annual increase, while spending on food and beverages was up by 5.1%.
There was also a 3.9% increase in spending on clothing and footwear, as holidaymakers prepared for their summer getaways.
Meanwhile, spending on health and education was down by 0.9% year-on-year in July, while spending on transport and communication fell by 3.8%.
The index, compiled by financial information company Markit, reflects all consumer spending, not just that on cards.
Annabel Fiddes, an economist at Markit, said: “It appears consumers enjoyed the warmer weather in July by increasing spending on new clothes, meals out and day trips.”
But she cautioned: “Although the July data point to signs of improvement, anxiety around Brexit and a slowing private sector economy may pose further downside risks to expenditure growth for the rest of 2016.”