UK consumer spending rises for second month running

February’s 0.2% uptick allays fears of Britain slipping back into recession

UK consumer spending edged up for the second month running in February, according to new figures fanning hopes that the economy enjoyed a modest bounce at the start of the year.

Helping to allay fears that the UK had slipped back into recession, payment company Visa Europe said on Wednesday that consumer spending rose 0.2% on the month, adding to January’s 0.2% uptick.

Visa, which said transactions on its cards accounted for £1 in every £3 of UK spending, cautioned however that spending was down 1.3% on a less volatile three-month on three-month basis. On the year to the end of February, spending fell 1.7%.

Steve Perry, commercial director of Visa Europe, said: “February saw the first consecutive month-on-month increase in consumer spending since last July … further bolstering confidence that the economy may be slowly returning to growth.

“However, the underlining trend revealed by the three-month on three-month data remains subdued, suggesting that we still have a way to go before we can talk of a full recovery.”

Behind the headline numbers was further evidence that people are increasingly turning to the internet to find bargains. Online spending rose 4.4%.

There were also signs of higher spending on more discretionary items, with clothing and footwear up 7.4% and hotels and restaurants up 6.9%.

A separate report suggests retailers are still struggling to raise prices against a backdrop of weak consumer confidence. Shop price inflation slowed to just 1.2% in February according to the British Retail Consortium (BRC).

The slowdown came as the non-food category turned deflationary for the first time in more than two years. Prices were down 0.7% on the BRC-Nielsen shop price index.

BRC head Stephen Robertson said: “While fuel and utility bills are eating up an ever bigger proportion of household budgets, many goods sold by retailers now cost less than they did a year ago. Clothing, electricals and furniture are all cheaper than at this time in 2011 as retailers respond to the squeeze on personal finances by cutting prices, reducing their own underlying profitability.”

Food prices meanwhile recovered somewhat to 4.2% from January’s 19-month low of 3.7%, with the BRC blaming higher transport costs for the increase.

The lobby group took the modest inflation rate as an opportunity to call on the chancellor, George Osborne, for help for businesses at this month’s budget.

“When shop prices are up by just 1.2% there’s even less justification for the eye-watering 5.6% business rates rise planned for April. Reducing this huge hike in trading costs should be a priority for the budget,” said Robertson.


guardian.co.uk © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds