Key facts
- UK consumer spending reached a 13-month high in August.
- Overall card spending grew 2.1% year-on-year.
- Fuel spending saw the largest increase at 13.2%.
- Entertainment spending grew 7.2%, with travel up 3.1%.
- Consumer confidence in household finances improved, but economic confidence declined.
UK consumer spending reached a 13-month high in August, with overall card spending growing 2.1% year-on-year, according to Barclays' data. This increase was bolstered by a significant rebound in the entertainment sector, which saw spending grow by 7.2%, and a 3.1% rise in travel expenditure. Fuel costs continued to be a major driver of spending, increasing by 13.2%, a trend linked to disruptions in the oil market following the US-Iran conflict and elevated Brent crude prices.
While spending on big-ticket non-essential items like home improvements and department store purchases saw declines of 0.9% and 2.2% respectively, the growth in entertainment and travel helped offset these drops. Consumers sought air-conditioned venues like cinemas and bowling alleys during a heatwave.
Consumer confidence in household finances saw a slight improvement, edging up to 66% in August from 64% in July. However, confidence in the broader economy declined to 26% from 30% the previous month, influenced by persistent inflation and commodity price risks stemming from the Middle East conflict.
Barclays' chief UK economist, Jack Meaning, noted that consumer spending and confidence remained resilient. He suggested that consumers could "weather the bout" of temporary inflation but warned of risks if the Middle East conflict persists or intensifies, potentially requiring households to be more selective with their spending.