Consumer seeks woolly jumper: retail spend rises 3%

UK household spending increased by 3% month-on-month in September, reckons a new report. It's the strongest monthly growth since May 2009.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
Visa Europe's latest UK expenditure index brings a little autumnal cheer to British retailers. It has found that sales rose 3% in September as chilly folk dashed out to buy woollies and stock up on belly fat at their favourite eateries. That’s more than double the 1.2% increase in August.

High street shopping, referred to rather opaquely as ‘face to face’ spending in the report, is up 1.6% year on year, the first growth seen since March and the sharpest increase seen since October 2010. High street stalwart John Lewis has certainly noticed an uptick in consumer spending: total sales in the week to 29 September are up 26.5% from the same period last year. The department store chain says that trading had received a substantial boost from shoppers buying new coats and shoes for the coming winter.

Clothing and footwear spending overall is up a very respectable 6.1% in September, says Visa's data crunchers. But it’s not the key driver of sales growth. A surer sign of a return to consumer confidence is the spike in hotel and restaurant bookings where growth is up 8.2% year-on-year. Consumer spend on food and drink has increased at a slower pace, probably due to rising food prices, at 1.8% year-on-year.

On the world wide web, however, it’s a different picture. Online spending actually fell by 1.5% last month. Mail and telephone ordering (from mail-order catalogues etc) also saw a 3.7% decline, although you can tell that things are already hotting up for Christmas: total online sales decreased 9.3% the previous month. According to the ONS, that’s because people were watching the Olympics rather than buying stuff online.

All in all, however, it’s a spot of pre-festive cheer for the high street. This index is usually a pretty reliable barometer of consumer spending as £1 in £3 of all UK spending gets put on a Visa card.

Chris Williamson, chief economist at Markit, which compiles the report for Visa, is also upbeat in his forecast for future consumer spending; ‘Going forward, it seems likely that consumer spending will help boost the economy to a greater extent than it has done over the past two years, due to recent improvements in disposable incomes, lower inflation and rising employment.’

Huzzah!


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