Spending in the UK economy reached a 13-month high in August after a rebound in the entertainment and travel industries, according to fresh data from Barclays.
Overall card spending grew 2.1 per cent year-on-year, following on from two per cent growth in July. Both essential and non-essential spending were up 2.1 per cent, according to Barclays’ spending data.
Fuel saw the highest spike in spending with growth of 13.2 per cent, continuing a trend seen in the fallout of the US-Iran war after petrol prices surged due to disruption in the oil market. Brent crude – the international benchmark for oil prices – breached a four-year high of $126 per barrel earlier this year. While prices have tempered, a barrel of crude remains above $97, well-above the pre-war level of around $70.
Some non-essential big ticket spending dropped including home improvements, which was down 0.9 per cent, and department stores, down 2.2 per cent.
This was offset, however, by a bounce back in entertainment with spending growing 7.2 per cent. Barclays pointed to cinema successes such as The Odyssey and the new Spider-Man, as well as bowling alleys, as Brits sought air conditioned venues in the heat wave.
Travel also increased 3.1 per cent as more holidaymakers opted for staycations over trips abroad.
“Consumer spending and confidence remained resilient in August, even as pressures from the Middle East conflict began to filter into prices,” Jack Meaning, chief UK economist at Barclays, said.
He said the latest spending data suggested consumers could “weather the bout” of inbound temporary inflation, but warned “risk remains” if the conflict in the Middle East persists or intensifies “squeezed households may need to be even more discerning with their spend”.
More broadly, Brits confidence in their household finance edged up to 66 per cent in August from 64 per cent in July. But confidence in the economy dropped to 26 per cent from 30 per cent the month prior.
Economic confidence was hit by external pressures from persistent inflation and commodity price risks as the Iran war took hold.