Consumer spending shows tentative signs of recovery

Following a monthly rise of 0.3 per cent in January, the latest figures from the Visa UK Expenditure Indexshow the first month-on-month rise in spending since consecutive monthly growth was last seen in June and July 2011.

After adjusting the figures for the extra day, due to 2012 being a leap year, the findings show that although spending remained down on an annual basis, the trend was improving.

Spending in February was down 1.7 per cent on a year earlier, compared to the -2.3 per cent fall in January.

The Index, which is published on a monthly basis, uses card spending data and adjusts it for a variety of factors to create a like-for-like comparison of consumer spending.

Commenting on the findings of this month's Index, Dr Steve Perry, commercial director at Visa Europe, said the month-on-month increase in consumer spending was a sign that "the economy may be slowly returning to growth".

However, looking at the subdued trend revealed by the quarter-on-quarter data, Dr Perry maintained that "we still have a way to go before we can talk of a full recovery".

Spending online continued to rise on a year-on-year basis during February, with the rate of expansion accelerating faster than at the start of the year, from 0.5 per cent to 4.4 per cent.

Dr Perry put this significant increase down to the consumer's "ongoing quest for a bargain".

Chris Williamson, chief economist at Markit, the financial information services company which compiles the data, said the increase in consumer spending for a second consecutive month in February added to a growing batch of indicators that "the gloom is steadily lifting from UK households".

He attributed the increase to the recent "easing in inflation" and the increasingly positive tone of media headlines so far this year, which had "lifted consumer confidence".

Yet, pointing to the fact that consumer spending remains lower than a year ago, he said that households continue to struggle with "low pay growth and widespread job insecurity".