UK consumer spending exceeds last year’s

UK consumer spending in August exceeded last year’s level for the first month since the coronavirus lockdown began, helped by a rebound for clothing, pubs, and bars, but shops continued to struggle as more was bought online. Consumer spending grew 0.2 per cent in August, compared with the same month last year, up from a 2.6 per cent contraction in July and the first expansion since February, according to data from Barclaycard.

The payments company claims it tracks nearly half of the nation’s credit and debit card transactions. The growth was helped by an annual expansion of 9.3 per cent for pubs and bars, the first growth since the start of lockdown. Spending on clothing also returned to growth for the first time since February, while sales in supermarkets remained strong, up 14.9 per cent over the same month last year. The figures add to evidence of a sharp economic rebound in the third quarter. Raheel Ahmed, Head of Consumer Products at Barclaycard, said: “It’s encouraging to see the first uplift in spending after such a turbulent time for retailers. It seems the final throes of summer have spurred households to get out and about with clothing stores, pubs and bars welcoming growth for the first time since lockdown began.” However, he noted that the end of the Government’s “eat out to help out” scheme and spending moving indoors as the weather gets colder “will see the resilience of businesses truly tested”.

Moreover, some sectors were still depressed, including leisure, hotels and accommodation as social distancing measures remained in place. Spending in this sector was down 19.1 per cent compared to August last year, despite a 10-percentage point improvement from July. Airlines and travel agents reported spending down 61 per cent in August compared with the same month last year.
Barclaycard registered strong online sales for supermarket and clothing stores and a 65.8 per cent annual increase in meal ingredient delivery services, as households adapted to more time spent at home. The trend was confirmed by data compiled by advisory services firm KPMG and the British Retail Consortium, an industry body, which reported retail sales rising at an annual rate of 3.9 per cent in August. This compares with the 12-month average monthly decline of 18.4 per cent.

However, the increase was mostly for internet spending, with online non-food sales rising at an annual rate of 42.4 per cent in August. As a result, nearly 40 per cent of non-food sales were done online in August, up 10 percentage points over last year. In contrast, in-store sales of non-food items shrank 17.8 per cent.  “Lockdown also appears to have permanently changed some consumers’ shopping habits, with online sales continuing to boom despite shops reopening in June,” said Helen Dickinson, BRC Chief Executive. “Meanwhile, city centre retailers continue to be devastated by low footfall and poor sales, as office workers stayed away for yet another month.”

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