The first quarter of 2014 was the best for consumer spending since the Olympics.
Conservative MP Andrea Leadsom said today’s figures from the
Visa Europe’s UK Expenditure Index “show that the economic recovery is being felt in people’s pockets”.
Analysts said warm weather, a buoyant property market and the end of the inflation squeeze are all impacting positively on consumer confidence.
Household expenditure in the UK increased by 0.7% year-on-year in March, up from 0.3% registered in February.
Consumer spending has now risen on an annual basis for the past six months. Month-on-month expenditure also rose in March (1.6%), following a slight fall in February (-0.3%).
Leadsom, who sits on the Commons Treasury select committee and is a member of the No.10 policy board, told Central Lobby:
“The underlying improvement is household spending shows that the economic recovery is being felt in people’s pockets.
“This is the 6th consecutive month showing an annual increase, and shows that the economic recovery is now being felt by hardworking people.
“This is huge vindication of this government’s economic policies and comes on the back of rising consumer confidence, improved UK productivity data, and lower-than-expected inflation.
“While there is still much to be done to secure the recovery and to ensure that it is broad-based, this is very encouraging news indeed.”
The
Visa EuropeUK Expenditure Index takes card spending data and adjusts it for a variety of factors to create a like-for-like comparison of consumer spending.
In line with the positive readings for annual and monthly expenditure measures, household spending also rose on a quarterly basis in March (1.2%) following a marginal reduction in February (-0.5%).
“Consumer spending hasn’t been this strong since the third quarter of 2012 when Britain basked in the glow of the Olympics,” said Jeremy Nicholds, Director of Commercial Development at Visa Europe.
“Looking ahead, the economy is poised for a strong increase in consumer spending through the second quarter of 2014.
“Spending roared ahead in clothing, footwear and household goods in March. Publicans, hoteliers and restaurant owners will be raising a glass as well, with spending increasing at the quickest rate in over two years.
“The only cloud is over food and drink sellers, including the supermarkets, as spending in this category fell by 3.2% in March following a fall in February.
“The late Easter this year is giving no respite to the sector as it continues to gear up for a price war.”
Household expenditure increased through Online spending channels, fell through Mail/Telephone Order categories, and was broadly unchanged in Face-to-Face categories.
The Visa Expenditure Index shows online spending increased 4% on an annual basis in March
Expenditure through Face-to-Face channels was meanwhile little-changed from the previous year (+0.1%), following a slight fall in February of -0.9%.
Paul Smith, Director at Markit, said:
“The increase in spending volumes during March carries on with the solid run of expenditure growth seen in recent months.
“The considerably better weather seemed a key driver of the latest rise, with Clothing and Footwear stores reaping the benefits, while the rapidly strengthening property market is also having positive spill-over effects on household goods retailers.
“Although some temporary uplift was provided by the weather, the underlying improvement in household spending is again further evidence that the vastly improved UK economic climate is starting to be felt by consumers.
“As real wage growth finally begins to pick up and the labour market tightens further, expect expenditure volumes to finally move back above pre-financial crisis levels in the coming months.”