UK Christmas sales 2015: Consumer spending soars as retailers worry over upcoming figures
A double-whammy of sales data has suggested we could be in for bumper Christmas sales figures.
Card giants Visa and Barclaycard both report that spending bounced back from a summer slow down in October.
Visa’s index found spending growth rose to a three-month high last month, up 2.1 per cent, while Barclaycard revealed spending growth in October of 4.1 per cent year-on-year.
According to Barclaycard however there is a growing gap between spending on essential and ‘non-essential’ items.
Non-essential spending increased by a tenth to 6.6 per cent in the month – from 5.8 per cent in September, and is higher than at any point in 2014.
Essential spending fell by 3.1 per cent, its worst performance since March 2014, led by a fall in supermarket spending which was down 0.9 per cent compared to last year – its worst performance in 19 months.
This rise in non-essential spending was helped by the falling inflation rate in September, which dropped 2.5 per cent over the last 12 months as supermarket price wars affected the grocery industry, according to the Office for National Statistics.
This, combined with falling petrol prices – diesel is at its lowest level since December 2009 – has acted as a ‘de facto tax cut’ for households.
Kantar Worldpanel found last month that the supermarket price war was saving each household £58 on average. Meanwhile, in the three months to August, total earnings were up 3 per cent from a year earlier.
Visa picked up on the trend and found the majority of spending on hotels, bars and restaurants outperformed the rest, up 10 per cent, while spending on recreation and culture was up 5.3 per cent on the previous month.
Chris Wood, chief operating officer at Barclaycard said: “Retail spending performed strongly in October as further growth in employment and wages was met by falling food and petrol prices. With consumer confidence also at high levels, shoppers feel better off and more able to spend more on discretionary purchases.”
There is a high degree of uncertainty on the high street over how Christmas sales and the increase in online shopping will impact on sales.
Argos and Homebase owner Home Retail Group issued a pre-Christmas profit warning last month wiping £200m off the value of the company as the shares dived 16%.
The chief executive John Walden admitted the arrival of the late November sales tradition from the US made the season difficult to predict.