UK consumer spending rises for first time in four months

Household expenditure in the UK rose for the first time in four months in August, but is on track to post its weakest calendar year of growth since 2013, a new report has said.

Spending rose 0.3% compared to a year earlier in August, the first expansion recorded since April this year, Visa and IHS Markit said.

This was driven by a 6.5% increase in online spending, while face-to-face spending fell for the fourth successive month, albeit at a slower pace compared to July.

Visa said the rise in August was not a sign that the squeeze on consumers' pockets due to inflation and stagnant wage growth was easing, and added that the growth may have been supported by a particularly weak performance in the same month of last year.

"Consumer spending in August has bucked the trend of the previous three months, registering a marginal increase against the same period last year," said Kevin Jenkins, UK and Ireland managing director at Visa.

"Nevertheless we are wary about taking this as a sign that the household squeeze is easing given the clear slowdown in spending during the preceding three months."

Five of the eight broad expenditure categories saw increases in spending during August, with miscellaneous goods and services, which includes jewellery, hair and beauty products, posting the biggest gain.

Spending on hotels, restaurants and bars and recreation and culture also increased, while expenditure on household goods expanded for the first time in nine months.

Transport and communication was the worst performer for the eighth month in a row, as consumers continued to shy away from big-ticket items such as car purchases and air travel.

Visa added that with average spending growth at around 0.2% this year, household expenditure was poised to experience its weakest calendar year since 2013.

It warned that rising prices, lacklustre wage growth and uncertainty due to Brexit talks would continue to weigh on household consumption and economic growth through the rest of the year.