Spending hits 13-month high as Brits splurge on entertainment, Barclays says

In August, the UK economy experienced a 13-month high in spending, primarily driven by the entertainment and travel sectors, according to Barclays data. Overall card spending increased by 2.1% year-on-year, following a 2% growth in July, with both essential and non-essential spending rising by the same percentage. Fuel spending saw the largest surge, growing by 13.2%, a trend attributed to the spike in petrol prices due to the US-Iran war disrupting the oil market.

Despite this, Brent crude oil prices have since stabilized, trading above $97 per barrel, which is still well above the pre-war level of around $70.

While spending on non-essential items such as home improvements and department stores decreased, entertainment spending saw a notable 7.2% increase. This growth was fueled by successful cinema releases like "The Odyssey" and "Spider-Man," as well as the popularity of bowling alleys during the heatwave. Travel spending also rose by 3.1%, as more people chose local holidays over international trips.

Barclays' chief UK economist, Jack Meaning, noted that consumer spending and confidence remained strong in August, despite rising prices stemming from the Middle East conflict. He highlighted that the resilient spending data suggests consumers can endure short-term inflationary pressures. However, Meaning warned that if the conflict escalates, households might need to become more selective with their spending.

Overall, consumer confidence in their finances improved to 66% in August from 64% in July, while confidence in the economy decreased to 26% from 30% the previous month. This decline was attributed to persistent inflation, commodity price risks, and geopolitical tensions from the Iran war.