UK consumer spending has shown resilience driven by early Christmas shopping and enthusiasm for eating out and entertainment, despite rising inflation, increasing pressure on the Bank of England to raise interest rates. I am.
Several factors threatening the recovery of household spending, including inflation 10 years high, Tax increases, soaring gas prices, and withdrawal of Covid support for work and income.
“But for now, consumers are still resilient,” said Andrew Goodwin, UK Chief Economist at Oxford Economics, a consultancy.
Official and non-standard economic data show that consumer spending on goods and services increased in October and November, despite headwinds.Early Christmas shopping helped retail sales Return to growth While spending time at the cinema last month, bars and restaurants returned to pre-pandemic levels.
Elizabeth Martins, senior economist at HSBC Bank, says people are “clearly festive.”
Strong work Numbers, Highest vacancy rates ever, lower Covid-19 infection rates, and the end of the fuel crisis in September have increased consumer confidence. Rose According to the index compiled by research firm GfK, November was 3 points minus 14.
Bank of England Governor Andrew Bailey warning In an interview with The Sunday Times, he said economic activity was “slowing down” and the risk to inflation forecasts was “two-sided.” The BoE now expects inflation to peak at 5% in April.
But prior to next month’s meeting, Goodwin said higher-than-expected spending on the health and consumer sectors “provides some encouragement to members of the Monetary Policy Committee concerned about slowing growth.”
“October activity is going well, raising expectations that the Bank of England will raise interest rates from 0.10% to 0.25% in December,” said Adam Hois, economist at Capital Economics. ..
UK cinema revenues were above pre-pandemic levels from October to November, according to data from Box Office Mojo, which tracks box office revenues.
Similarly, as of Saturday, November 20, the number of restaurant diners was 30%. Moreover According to the booking platform OpenTable, it’s on the same day of the week in 2019.
“Restaurant sales continue to be very strong,” Martins said.
The values of both banking and credit and debit card transactions showed an upward trend in the fall, according to figures from data firms Fable Data and the Bank of England.
Avinash Srinivasan, an analyst at Fable Data, said consumer spending growth “above the recent average” in recent weeks, hitting a high in the week leading up to November 14. This is 12% above the 2019 level.
Spending in pubs and restaurants shows the same trend, “currently consistently above 2019 levels by about 10 percent,” he added.
According to data from retail consultant Springboard, retail sales for the week leading up to November 20 increased by 4% compared to the previous week to about 88% of the level seen during the same period before the pandemic.
“The beginning of the Christmas trading period began in earnest at many retail destinations last week,” said Diane Wehrle, Springboard Insight Director, who will benefit most from Highstreet, the Shopping Center and the big cities. Said that.
Shoppers are “clearly drawn to big towns and cities to absorb the Christmas atmosphere,” she added.
She expects an additional 8% increase in footfall during Black Friday week, an American-style sales holiday on November 26th.
The potential for stronger spending during the festive season is supported by the rapid deployment of the third coronavirus jab, with more than one in four people over the age of 12 already being shot in the UK, blocking restrictions. The risk of is greatly reduced. It was reintroduced.
After a calm Christmas last year, “I was able to see consumers splatter during the bumper celebration, especially when many households ran out of savings,” said RSMUK, a partner and retailer of tax consulting firm. Jacqui Baker, Head of the Department, said.
Forecasts begin with the high levels of rail, bus, and London Underground since the pandemic began, and mobility continues to normalize. On the other hand, flight numbers are increasing rapidly as seasonal leisure travel revives. “People are certainly traveling more,” said Gabriella Dickens, an economist at consultancy Pantheon Macroeconomics.
Non-standard economic data such as footfalls, restaurant reservations, mobility measures, etc. are not as comprehensive as official economic activity figures, but are increasingly by policy makers as a more timely indicator of economic health. It is being monitored.
Private consumption has been the driving force behind Britain’s economic recovery since the height of the pandemic that stagnated many sectors. In the third quarter, it contributed 1.2 percentage points of economic growth of 1.3%.
Some economists predict that growth will slow at the end of the year as Covid’s deregulation will weaken, supply chain disruptions and shortages will put pressure on capacity, and rising inflation will put pressure on real income. ..
Yael Selfin, Chief Economist at Advisory Company KPMGUK, said:
But Investec economist Sandra Horsefield said the data “at least for now” show “positive signs.”
“Household income not only benefits from continued strong employment growth, but also a significant amount of excess savings have accumulated during the pandemic,” she said.
UK consumer spending continues to rise despite rising inflation
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