The key chart
The key message
The message from the UK money sector is still one of resilient consumer spending, despite rising inflation and falling real incomes. Monthly spending on credit and debit cards in June 2022 was 1% above pre-pandemic levels and 6ppt above the level of monthly spending a year earlier.
UK households (HH) are increasing spending the most on getting to work and on staples. Spending on these categories was 32% and 13% above pre-pandemic levels in June 2022. Social spending was 1% above pre-pandemic levels, but spending on delayable goods such as clothing and furniture was still 16% below pre-pandemic levels.
Over the past 12 months, social spending and work-related spending have increased the most. Social spending has increases 18ppt from 83% pre-pandemic levels to 101% of pre-pandemic levels. Work related spending has increased 20ppt from 112% pre-pandemic levels to 132% pre-pandemic levels.
Delayable spending is the only spending category that (1) has fallen over the past twelve months and (2) remains below pre-pandemic levels. Delayable spending has fallen from 89% pre-pandemic levels in June 2021 to 84% pre-pandemic levels in June 2022. This matters because delayable spending is our preferred indictor regarding the extent to which excess savings are returning to the economy in a sustained fashion.
In short, the impact of rising inflation and falling real incomes is evident more on spending patterns than on the overall level of spending. UK HHs are increasing spending more on getting to work and on staples, unsurprisingly, and less on items such as clothing and furniture. Daily spending data through to 21 July 2022 is consistent with these monthly trends.
Please note that the summary comments and chart above are extracts from more detailed analysis that is available separately.