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Consumer spending grows 1.3% in August as economic uncertainty continues

Consumer spending grew by 1.3% year-on-year in August – representing a decline in real terms when accounting for inflation – bringing a summer of muted growth to a close.

Data from Barclaycard, which sees nearly half of the nation’s credit and debit card transactions, shows that essential spending rose by just 0.6%, with petrol contracting by 1.9% and supermarket expenditure increasing by a modest 1.3%.

Meanwhile, non-essential spending rose by 1.4%, bolstered by strong growth from pubs and restaurants, 10.9% and 8.6% respectively, as Brits enjoyed relaxing and dining out.

Travel increased by a modest 0.6%, with travel agents up 1.0%, whereas airlines and hotels contracted by 0.4% and 0.2% respectively.

In contrast to the overall trend seen by the retail sector in recent months, spending at discount stores rose by 8.0%– suggesting that many consumers are seeking better value for money in the purchases they make.

More broadly, August’s overall spending figure of 1.3% was relatively low in comparison to August 2018, which saw growth of 4.5% year-on-year.

Economic uncertainty continues and the effect of the weak pound weighed heavily on consumers’ minds in August. Only 31% of UK adults suggest they are confident in the UK economy while over half are worried about the impact of rising prices over the next month.

Esme Harwood, director at Barclaycard, said: “August’s figures signal the end of a fairly subdued summer for consumer spending – showing a marked contrast to the previous August. A weak pound and worries about rising prices are causing concern for many, with Brits looking to better balance their household budgets. That said, spending at pubs and restaurants remains robust, suggesting Brits have been making the most of the longer days by relaxing and dining out.”

 

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