Consumer spending rebounded in August, up 4.2% year-on-year from muted growth of 2.6% in July, with soaring temperatures encouraging shoppers to splash out on clothing and entertainment.
Data from Barclaycard, which processes nearly half of all the nation’s credit and debit card transactions, indicates consumers took a ‘business as usual’ approach to spending – and followed through on plans they committed to months in advance – as they saw little change to their disposal income following the outcome of the EU Referendum.
The figures show that spending on experiences and holidays boosted growth in August. Travel spend grew 3.2% to a three-month high, driven by spending on hotels which rose 14.9% recording its highest year-on-year increase in 24 months. The growth was primarily due to the rising cost of overseas accommodation in line with the depreciation of the pound.
On home soil, cinema spending continued to perform strongly, rising 14.6%, as the release of Finding Dory along with the ongoing success of BFG and Pete’s Dragon made the cinema a key destination for families over the school holiday period.
Pubs (13.3%) and restaurants (12.7%) both saw an uplift during the month.
Caution still lingers, however, for many consumers: despite the August rise in spending, only 58% of consumers express confidence in their household finances, significantly lower than the average of 71% recorded in 2015. In addition, long-term forecasts for rising prices and subdued wage growth may be responsible for just four in 10 (38%) consumers saying they are confident in the UK economy.
Paul Lockstone, managing director at Barclaycard, said: “Consumer spending has continued to grow after the EU referendum, with August being a particular stand-out month considering confidence in household finances remains low compared to levels seen last year.
“Spending peaks in travel and hotels indicate that most consumers were firmly committed to their summer plans, and spent on trips and excursions they booked months in advance. Yet confidence continues to be shaky as the wider economic picture remains uncertain, suggesting it’s too soon to tell if this lift in spending will last once everyone’s holiday tans have faded.”