Spending was up 2.4% compared to 12 months ago, the second biggest rise since April 2010 and tenth consecutive month the
Visa EuropeExpenditure Index has recorded an increase. The annualised growth accelerated from June, when it was 0.5%, despite an overall fall month-on-month.
Ann McKechin, a Labour MP who sits on the Business, Innovation and Skills Committee, welcomed the findings.
“It’s good news that there has been a rise in retail sales after a long period of slow growth. However the marked rise in personal debt over recent months should continue to give us concern that this increase may be temporary.
“Too many people are still suffering a decrease in their living standards and more must be done to tackle the income gap.”
Spending in hotels, restaurants and bars increased more strongly than any other sector, while face-to-face spending also grew by 1.9%. The data led Natasha Toothill, Visa Europe’s director of retail, to attribute some of the growth to good weather and sporting events like the World Cup and Commonwealth Games.
“Spend at hotels, restaurants and bars enjoyed particularly strong growth, up 8.1% on last year, as consumers splashed out on summer holidays and eating out,” she said.
“With low inflation, strong employment growth and rising consumer confidence, Britons are edging away from recession spending habits to indulge more on the things they enjoy.
“The high street continues a summer comeback with another month of growth in face-to-face spending, perhaps due to the summer’s warm weather and major cultural and sporting events, which bring with them an influx of domestic and foreign tourists.”
The Index is based on data from credit card payments which are then adjusted to reflect overall consumer spending. The figures point to the economic recovery continuing into the future, but Paul Smith, senior economist at financial firm Markit, warned that an increase in interest rates could threaten the run of good news.
“The data undoubtedly add to the positive news flow on the UK economy evident in recent months,” he said. “With the labour market tightening, and amid signs of a pick-up in wage inflation, we expect household expenditure to make further positive contributions to GDP growth in the second half of the year not withstanding any surprise hike in interest rates during Q4.”