Economists say the latest figures show 2013 is "rapidly turning out to be a much better year than many probably dared to expect".
Household expenditure increased by 1.6% month-on-month in August. This followed a marked reduction in consumer spending in July (-2.4%), and was the fastest monthly increase since last September.
This is according to
Visa Europe’sUK Expenditure Index, which takes card spending data and adjusts it for a variety of factors to create a like-for-like comparison of consumer spending.
Consumer spending rose on an annual basis by 0.8% in August.
Samuel Tombs, UK Economist at Capital Economics, said: "The Visa Expenditure Index provides another indication that consumers have become much more confident to spend in the shops.
"Further growth in consumer spending should be supported by a further easing of inflation, a revival in the housing market, and additional jobs growth. However, the need for households to save a larger proportion of their incomes to address their weak balance sheet may prevent the recovery in spending from gaining much more pace."
Paul Smith, Senior Economist at Markit, said:
“August proved to be a good month for UK household spending, with clothing retailers and restaurants amongst the principal beneficiaries.
“Rising 1.6% on the month, growth has now been registered six times so far this calendar year, indicating that July’s fall was a mere blip; indeed 2013 is rapidly turning out to be a much better year than many probably dared to expect.
“Higher spending volumes are intrinsically linked to the recent strengthening in the UK economic environment. Workplace activity is rising and job security is steadily improving, providing the basis for a strong upturn in consumer confidence and spending recovery.
“Although year-on-year growth in household expenditure remains relatively modest, and the on-going squeeze in real wages provides fragility to the outlook, August’s Visa Europe: UK Expenditure Index adds further to the feel-good factor that seems to be currently engulfing the UK economy.”
Online spending grew by 1.1% year-on-year, following a modest reduction in July, and expenditure through Mail Order/Telephone categories continued to increase in August, rising by 3.9% on the year, up from 2.7% in July.
Increased household spending in all of the three monitored spending channels supported expenditure growth in August, with both annual and monthly measures back in positive territory, following modest reductions in July. The three-month-on-three-month measure fell by -0.5% in August, though this was largely a result of the weak performance seen during July.
Jeremy Nicholds, EVP Commercial Development at
Visa Europe, said:
"Consumers’ willingness to spend more in August was evident in the upward trends witnessed in clothing and footwear and miscellaneous goods and services, including hairdressers, beauticians, jewellery and financial services, which registered positive growth.”
The Visa UK Expenditure Index uses card transaction data to provide a robust indicator of total consumer expenditure across all payment methods. It is based on spending on all Visa debit, credit and prepaid cards which are used to make an average of over 1.9 billion transactions every quarter and account for £1 in £3 of all UK spending.