Consumers enjoyed summer spending before autumn price rises – Nationwide

According to Nationwide’s report on members’ monthly spending, people spent more money and made more transactions last month as they made the most of the warm weather and the start of summer vacation.

Consumers spent more on holidays, leisure activities such as watching sporting events and buying new clothes in hot weather in the UK in July.

Meanwhile, spending on food and drink rose 8% compared to June as people enjoyed catching up with family and friends in pubs and restaurants, the building society noted.

It came after households cut across the board on essentials and non-essentials the previous month, a sign that rising costs had started to weigh on people’s budgets.

People have reduced spending on subscriptions, home improvement and gardening, and dating since last year, reflecting a shift in priorities on nonessentials, she added.

In addition, spending to pay off debt such as credit cards and loans increased 13% compared to July last year and 5% compared to June. That increase shows that more people have had to resort to borrowing to make ends meet as the cost of living rises, Nationwide said.

The increase in spending also reflects higher prices for the same items compared to the previous year.

Payments for fuel and electric car charging rose 37% year-on-year and 7% compared to June amid rising petrol and diesel costs, while spending on utilities and other bills such as taxes increased by a fifth year-on-year and compared up 8% month-on-month.

Inflation hit 10.1% in the 12 months to July as rising food and fuel costs pushed the rate to another 40-year high.

Mark Nalder, Head of Payments at Nationwide Building Society, said: “Spending is higher this year than last year. Perhaps even more surprising, however, is the increase in the total number of transactions made by members in July of this year compared to the 12 months prior.

“This suggests that despite the trying times consumers are facing, many seem to be putting caution to the wind this summer, knowing it could well be one last hurray before costs bite this fall.”

“However, we see the cuts continuing against this backdrop of increased spending, with notable declines in discretionary spending such as subscriptions, home improvement, dating and gardening – all compared to last July.

“We should get a clearer picture of how we’re doing as we head into September.”