The latest Consumer Spending Index by Visa Europe shows an increase in household spending of 2.2% compared with the same period last year, with hotels, restaurants and bars by far the best performing sector at 13.6%.
Recreation and culture also saw a significant annual boost of 9.7%, followed by the food and drink industry at 4.8%.
At the other end of the scale, the two worst performing sectors were miscellaneous goods and services, which fell compared to the previous year by 2.3%, and transport and recreation which saw no change.
Giving his analysis, Kevin Jenkins, UK & Ireland Managing Director at Visa Europe said: “February is always a key bounce-back month for retailers and 2016 has been no exception. Solid spending growth by consumers, especially on life’s luxuries, was responsible for a 2.2% annual growth figure. Face-to-face and online spending both grew, though the latter was stronger, suggesting retailers continue to forge ahead in this sphere.
“Hospitality and leisure sectors recorded stellar performance, as consumers treated loved ones to special dinners and romantic breaks on Valentine’s Day, while families enjoyed trips out during half-term. Hotels, restaurants and pubs owners saw spend reach the highest level for several years, up 13.6%. This was accompanied by a near 10% increase in spend on recreation and culture activities, the strongest performance for the sector for over a year-and-a-half.
“Valentine’s Day falling on a Sunday this year also saw people spend more on food and drinks for a cosy night in, with the sector reporting the best performance since January 2015.”
Annabel Fiddes, Economist at Markit added: “February data for the Visa Europe UK Consumer Spending Index pointed to a further robust rise in UK consumer spending, with expenditure rising +2.2% on the year, down only slightly from January’s increase of +2.5%. The latest rise in expenditure was underpinned by a variety of positive economic factors.
“Consumers continue to benefit from record low interest rates, subdued price trends and relatively low unemployment. Growth appeared broad-based, with consumers increasing their spend solidly on day trips and meals out, while Food & Drink categories saw the fastest annual increase in spending for over a year.
“However, the outlook for 2016 is becoming increasingly uncertain, as the global economy shows further signs of a slowdown. This, in time, may feed through to lower consumer confidence and spending.”
Responding to the figures with a note of caution, Labour MP and Treasury Select Committee member Wes Streeting said: “While a rise in consumer spending may seem like good news for the economy, we need to keep an eye on household debt, which remains at historically high levels.”