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Online summer sales fuels consumer spending growth

Online summer sales fuels consumer spending growth

Visa Europe | Visa

2 min read Partner content

Consumer spending grew by 1.9% in the year to August, according to the latest Visa Europe UK Expenditure Index.

Expenditure growth was led by online retailers, according to the figures, seeing a four-year high 10.7% increase compared to August 2014.

The growth was also triggered by spending on hotels, restaurants and bars, which increased markedly by 8.9% compared to the previous year.

The Recreation & Culture sectors, including cinemas and theme parks, also saw strong figures, rising by 8.9% in the year to August.

Meanwhile spending on miscellaneous goods and services grew significantly by 12.1% on 12 months earlier.

The overall annual growth figures for June and July were 1.4% and 1.8% respectively.  

As seen in July, spending dropped in three of the eight sectors measured by the index: clothing and footwear (down 1.8% over the year), transport and communication (down by 3.8%), and health and education (down by 3.6%).

Kevin Jenkins, the UK & Ireland managing director at Visa Europe, identified the culmination of summer online sales and boosts to Britain’s tourism industry as factors behind the increase in consumer spending.

“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,” he said.

“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, an economist at Markit, said adverse weather conditions in August sparked a reduction in consumer spending on clothing and footwear while simultaneously boosting online spending.

“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,” she said.

“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.”

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