Spending across hotels, restaurants and bars increased by 9.7% in January, according to the latest Visa Europe Consumer Index.
The Index found that UK consumer expenditure rose 2.7% last month, up from a 2.2% rise in December and the strongest annual rate of growth since May 2015.
Online spending continued to grow faster than in shops, rising by 4.6% in January, although this was down from December’s six-month high of 7.3%. Expenditure on recreation and culture was also up by 7.8% annually.
The only categories to show a fall in spending were miscellaneous goods and services, which include jewellery and hairdressing, and transport and communications.
The report said that low inflation and real wage growth are expected to support consumer spending in 2016, and are likely to help a sustained growth in expenditure this year.
Kevin Jenkins, UK and Ireland managing director of Visa Europe, said: “It’s a feelgood start to the year for retailers and consumers, despite the global economic jitters.”
Andrew Harker, senior economist at Markit said: “The start of 2016 showed no let-up in consumer spending following the Christmas holidays as the Visa Europe Consumer Spending Index signalled a further substantial upturn in household expenditure.
“The rate of growth even quickened from that seen at the end of last year, with consumers happy to spend on going out, as well as on big ticket items. Strong consumer confidence and falling unemployment suggest that there is little prospect of a slowdown in growth in the near-term at least.”
