By Suban Abdulla
According to a recent survey, British shoppers have increased their spending by 2.0% in annual terms, marking the strongest uptick since March. This comes despite concerns about tax rises in finance minister Rachel Reeves' upcoming budget and a rise in household energy bills.
Reeves, who took office in July, is set to deliver her first annual budget on Oct. 30. While she has warned of some tax increases, she has ruled out raising income tax and National Insurance rates.
Energy prices have also increased by 10% on Oct. 1, leading to a rise in the typical annual bill to 1,717 pounds ($2,244). This has raised concerns about the impact on household discretionary spending for the rest of the year.
A separate survey by Barclays showed a 1.2% year-on-year increase in spending on credit and debit cards in September, the biggest increase since April. However, with consumer price inflation holding at 2.2% in September, this increase represents a fall in real terms.
Entertainment spending saw a significant jump last month, with a 14.4% increase, attributed to the opening of ticket sales for concerts by British rock band Oasis, who are reuniting after a 15-year split. On the other hand, spending on essential items declined, with grocery spending falling for the first time since June.
Analysis:
Despite concerns about tax rises and energy bill increases, British shoppers have continued to spend, with entertainment seeing a significant boost. This could indicate consumer confidence and a willingness to spend on non-essential items. However, the rise in energy prices and stagnant inflation could impact household budgets in the coming months, leading to a potential shift in spending patterns.