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July consumer spending growth strong in UK

By EARLE GALE in London | China Daily Global | Updated: 2022-08-10 09:11
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Shoppers inside a branch of a Tesco Extra Supermarket in London, Britain, Feb 10, 2022. [Photo/Agencies]

Shoppers in the United Kingdom spent more during July than analysts expected, according to figures released on Tuesday, but the growth in spending still failed to match inflation.

The strong performance, which outstripped pre-pandemic consumer spending, offered a modicum of good news during a period that analysts say will be incredibly difficult for the UK economy.

Helen Dickinson, chief executive of the British Retail Consortium, or BRC, said the extra spending was down to increased demand for summer clothes, electric fans, and picnic hampers triggered by unusually hot weather, making it a one-off.

"Consumer confidence remains weak, and the rise in interest rates, coupled with talk of recession will do little to improve the situation," the Financial Times newspaper quoted her as saying.

She added that hikes in energy bills expected in the fall will further stretch disposable income and mean "both consumers and retailers are in for a rocky road throughout the rest of 2022".

The BRC compiled the consumer spending data in collaboration with KPMG.

They found the UK's retail sales growth in July was 2.3 percent higher than a year earlier, and 10.6 percent more than July 2019.

However, they warned inflation had pushed prices up, so people may have spent more money on buying the same quantity of products.

Consumer price inflation rose to 9.4 percent in June and is expected to hit 13 percent by December, the Bank of England warned last week as it announced an impending recession.

Payments company Barclaycard also released information on Tuesday about the UK economy, which suggested Britain's consumers were more interested in spending money on fun than on products during July.

Jose Carvalho, head of consumer products at Barclaycard Reporting, told the Financial Times families actually became more optimistic about their finances during July.

"Brits (were) increasing their discretionary spending on entertainment, travel, and takeaways," he said.

Barclaycard looked at around half of the UK's credit and debit card transactions to conclude spending was 7.7 percent higher in July than in July 2021. Again, the growth did not keep pace with inflation.

With inflation high and bills growing more quickly than pay rises, pressure has been mounting on Prime Minister Boris Johnson to introduce tax and spending measures to ease the so-called cost-of-living crisis.

However, Downing Street ruled out short-term action on Tuesday, with Johnson's spokesman saying "by convention it is not for this prime minister to make major fiscal interventions during" the period between his resignation and the appointment of a new prime minister.

Tony Danker, director-general of the Confederation of British Industry, said on Radio 4's Today program both Johnson and the two people vying to replace him should meet and agree on additional support the government should offer the UK's most vulnerable people.

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