CONSUMER spending hit a new high in September as people replenished their wardrobes for winter, a study has found.
Figures show last month had the strongest growth in consumer spending in nearly three-and-a-half years and Visa Europe puts it down to improvements in people’s finances.
Household spending increased by three per cent month on month, following growth of just 1.2 per cent the previous month. It brings growth to 1.9 per cent for the last quarter – the highest quarterly increase since July 2009.
The study said that while improvements in the job market and people’s disposable incomes are likely to continue to boost the economy, low consumer confidence will persist as a dragging factor.
Chris Williamson, chief economist at Markit, which compiled the report for Visa, said: “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.
“However, consumer confidence remains historically low as uncertainty about the economy and job security persists, suggesting that the bounce in spending seen in the third quarter could be as good as it gets for the foreseeable future.”
The results of the study also found that spending was up 0.2 per cent on the year to September, which is the first annual increase since July 2011.
The growth was driven by high street shopping, with face-to-face spending up 1.6 per cent year on year, representing the first growth since March and the largest increase for two years. Among the big winners was spending in hotels and restaurants, which rose by 8.2 per cent, and clothing and footwear, which grew by 6.1 per cent.
However, online spending dropped by 1.5 per cent, while mail and telephone ordering also fell by 3.7 per cent.
The results are based on spending on Visa cards, which accounts for a third of all UK spending. The figures are then adjusted to take account of consumer spending as a whole.