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Household spending continues to rise solidly, with online expenditure a key driver of growth in August

Visa Europe | Visa

3 min read Partner content

- Household spending rises +1.9% on the year in August, up from +1.8% in July - Hotels, Restaurants Bars (+8.9%) and Recreation Culture (+6.1%) both see marked increases in spend - Online retailers see sharpest rise in expenditure for four years (+10.7%)

UK households reported a further increase in expenditure in August. The Visa Europe: UK Expenditure Index data signalled a +1.9% year-on-year increase in spending in August, up from +1.8% in July, suggesting that expenditure growth remains on a steady and solid growth footing.

Spending rose in five of the eight broad categories in August, with Hotels, Restaurants Bars (+8.9% year-on-year), and Recreation Culture (which includes cinemas and theme parks) (+6.1%) both recording marked increases in expenditure. Furthermore, it was the strongest increase in Recreation Culture spending in the series six-year history. Misc. Goods Services (which includes hairdressing and jewellery) also reported strong growth (+12.1%), while spending continued to increase in the Food Drink (+2.3%) and Household Goods (+1.4%) categories.

Meanwhile, Clothing Footwear retailers recorded a further fall in spending volumes in August (-1.8%).

Kevin Jenkins, UK Ireland Managing Director Visa Europe said:

“Overall it’s been a strong summer for the British tourism industry. Like July, Brits are spending on family fun, meals and entertainment in particular. Indeed we’ve never seen such strong growth in recreation and culture spending in six years of tracking.

“The other big winner has been online retailers. While August’s mixed weather didn’t put off family activities, it did create a 10% surge in online spending at the same time. The end of summer online sales likely contributed too to a bumper month for online merchants.”

Annabel Fiddes, Economist at Markit said:

“UK households continued to record strong and steady rises in expenditure this summer, with consumers spending a greater amount on day trips, meals out and household goods in August. Furthermore, expenditure in recreation culture, which includes cinemas, theme parks and aquariums, rose at a record pace, while spending in food drink categories rose at the fastest rate in six months. Meanwhile, clothing footwear categories saw a further drop in spending volumes, perhaps dampened by the recent poor weather. That said, adverse weather conditions boosted spending at online retailers in August, and contributed to the fastest annual increase in online expenditure for four years.”

Expenditure growth was led by Online retailers in August, where growth hit a four-year high (+10.7% on the year), while spending on the High Street rose modestly (+1.4%).

What UK businesses are saying:

Visa is tracking the sentiment of several small businesses across the UK on a monthly basis, asking about their views on the economy, business conditions and forecasts for the month ahead.

Wendy Dalton, Blush Boutique, Oldham
“We’ve had an excellent month – business has even surpassed August last year. We’ve generated more sales and bookings as people are planning ahead and booking in their deposits for next year. In our local area there’s a positive outlook on the economy – there are lots of new cafes and cupcake shops opening which is contributing to this. People are definitely spending more too.”

Tony Bailey, Top Notch Hair Beauty, Manchester
“Less people walked through the door in August. But those that did, spent more on products and services than usual – the value of transactions was up 11% last month. People seem to be stocking up on haircare products in particular to take on holiday with them.”

Pauline Cusack, Glen Guest House, Birmingham
“We’ve seen a dip in business from the previous month. Customers who usually spend five nights with us are now away on holiday, meaning we’ve only had people coming to stay with us for one or two nights. However, we’re positive that the next few months will pick up – we’re already booked up throughout September and October.”

Read the most recent article written by Visa Europe - Latest spending figures show record highs

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