Consumer spending in Hotels, Restaurants & Bars increased by 4.7% in August 2018, according to the latest spending index from Visa UK – the biggest category increase last month.

Compiled by IHS Markit, the index showed a marked increase in spend across the hospitality sector – up from 2.5% in July, however still not as high as the +5.5% seen in June.

Spend was also up in the Food, Beverages & Tobacco category, up 2.6%, however Recreation and Leisure continued to see declines, down 3.3%.

Overall consumer spending rose last month, up 0.4%, on the back of a 0.9% decline in July. Face-to-face spend increased by 0.3%, but eCommerce expenditure fell by 0.2%.

Mark Antipof, chief commercial officer at Visa, said: “In a welcome contrast to the prior month, August’s consumer spending was buoyed by face-to-face purchases with back-to-school spending amongst parents likely contributing to a glimmer of hope for our high streets.

“The prolonged good weather has seen sustained performance for hotels, restaurants and bars and food and drink again topping the sector categories.”

He added that despite the increasing pressure on household budgets, “bricks and mortar retailers will take encouragement that face-to-face spending rose at a faster rate than e-commerce”.

“Since Visa’s Consumer Spending Index first launched, one of the overarching trends has been the dominance of e-commerce over face-to-face spending. This is certainly an area to watch as we move towards to big shopping events such as Halloween and Christmas.”

Annabel Fiddes, principal economist at IHS Markit, add that while the data signalled a renewed increase in consumer spending on an annual basis in August, the rate of growth was only slight and underscored the fragility of expenditure trends since early 2017.

“As the positive effects of the summer heatwave and summer sporting events have faded away, it seems unlikely that spending trends will improve much given the challenging conditions households face.

“Notably, wages are struggling to rise as quickly as living costs, while the recent rate hike by the Bank of England likely adds strain on household budgets. At the same time, consumer confidence remains stuck near its post-Brexit vote low, as concerns continue to mount over what kind of Brexit deal the UK can achieve when leaving the EU.” 

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