British Consumers Spend More on Essentials as Inflation Climbs

UK consumers spent more money on food and other essentials in June but cut back on less urgent purchases amid growing prices, according to two sets of industry figures.

Payments firm Barclaycard said year-on-year consumer spending growth softened to a 15-month low of 2.5 percent in June from 2.8 percent in May, while spending on household goods and entertainment also slowed.

According to the British Retail Consortium, its gauge of retail spending growth climbed to 2.0 percent in June from 0.2 percent in May, above its average of 1.4 percent in the previous six months.

However, BRC's chief executive, Helen Dickinson, said the pick-up emulated a temporary boost from warmer weather lifting clothing sales, along with the higher costs of food.

On a like-for-like basis, the BRC said sales rose by 1.4 percent year-on-year following a 0.4 percent decline in May.

Both figures from Barclaycard and BRC are not adjusted for inflation, which is running at an almost four-year peak of 2.9 percent as stated in the consumer price index. Therefore, the contribution of consumer spending to second-quarter economic growth could be limited.

Prime News are provided by InstaForex