Barclaycard said on Tuesday its measure of consumer spending rose 4.2 percent in August, the highest annual rise in just over a year, pushed up by the higher cost of holiday spending overseas after a post-Brexit vote fall in value of the pound.
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The United Kingdom’s shop price index fell during the month of August, following weakness in global crude oil prices; however, a depreciating domestic currency is likely to lend support to retail prices in the near term.
The food price deflation rate accelerated to 1.1% from 0.8% on the back of promotions from retailers, excess supply and a drop in the price of oil.
But there was a warning here too – with the report noting that shops had yet to feel the full force of the rising costs caused by the plunge in the value of the pound following the Brexit vote.
Meanwhile, BRC chief executive Helen Dickinson said prices may rise in near future when the costs are gradually passed down to consumers.
However, she said that’s likely to take several months to “properly” feed through as retailers won’t feel the cost increases until existing contracts with foreign suppliers come to an end.
However, he cautioned the retailers need to make a decision then like how to pass onto consumers and when.
That contrasts with a recent survey of retailers conducted by business lobby group the Confederation of British Industry, conducted between July 27 and August 12, which signaled sales increased after having suffered a steep drop in July in the aftermath of the June 23 vote on continued European Union membership.
It comes after retail sales suffered their sharpest fall in six months in June, contracting by 0.9 per cent from a month earlier.
August’s GfK Consumer Confidence Index was up five points to minus 7.
“The share of spend on food goods on promotion continued to fall, down to 28%, as retailers move to permanent price cuts instead of multi-buy and other promotional offers, ” the BRC said.
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Inflation rose to a higher-than-expected 0.6 per cent in July as the increasing cost of motor fuels and second-hand cars drove up transport prices, the ONS announced last month.
