The month of July saw a 1.6% annual rate of growth in expenditure across the country, according to Visa's UK Consumer Spending Index. The index, which was compiled by Markit on behalf of the American financial services firm, is based on spending on Visa debit, credit and prepaid cards, which together account for one-third of all spending in the country.

The report on the index seen by IBTimes UK showed that July's increase in spending was much better than June's 0.9% and May's 0.8% annual growth. However, the July growth rate is still lower than the 2.4% average growth UK has seen over the past two years.

Other highlights of the report were that the hotels, restaurants and bars sector saw the strongest on-year growth of 8.9% amongst the eight monitored broad sectors. The recreation & culture sector, which included spending on cinema and theme parks, saw an increase of 5.2% in annual spending, while the food, beverages & tobacco sector saw a 5.1% increase in spending over the year ago period.

With regards to e-commerce and face-to-face spending, the report said it was the first time since April that expenditure growth has been simultaneous across both these sectors. E-commerce spending grew 2.8% on-year, lower than the 4.6% growth in June. Face-to-face spending grew 1.6% on-year, marking an increase for the first time in three months.

While seven sectors experienced an increase in spending, just one sector saw a decline. For the month of July, the transport & communication sector saw spending decline by 3.8% on-year. On the positive side, however, this decline was the least over the past three months.

Commenting on the report, Kevin Jenkins, UK & Ireland managing director at Visa said, "July's data suggests that UK consumer spending is holding up despite the ongoing uncertainty following the referendum, albeit at lower levels of growth than we've seen in the last couple of years. Looking at the last three months, the Index indicates that consumers remain cautious with their spending. Overall growth is hovering nearly one percentage point below the average seen over the past two years."

"Looking at the sectors, the longer term trend we've seen for increased spending on leisure and recreation is enduring. And the high street saw its strongest annual growth rate in five months with clothing retailers in particular bouncing back after a fall in June," Jenkins added.