British Shoppers Increase Spending Despite Economic Concerns

By Suban Abdulla
LONDON (Reuters) – British shoppers increased their spending moderately in annual terms last month despite industry concerns about tax rises in finance minister Rachel Reeves’ upcoming budget and a looming rise in household energy bills, a survey showed on Tuesday.

The British Retail Consortium reported that spending in shops increased by 2.0% in annual terms in September, marking the strongest uptick since March’s 3.5% increase, though it is less than the 2.7% recorded in September 2023.

Reeves, who took office in July following the Labour government’s landslide election win, is set to deliver her first annual budget on Oct. 30. She has warned that some taxes will increase, although increases to the rates of income tax and National Insurance social security payments are ruled out.

“With energy prices having again risen, all eyes now turn to the budget and what impact that will have on household discretionary spending in the final quarter of the year,” said Linda Ellett, UK head of consumer, retail and leisure at accountants KPMG, who sponsors the data.

Regulated energy tariffs rose by 10% on Oct. 1, increasing the typical annual bill to 1,717 pounds ($2,244).

A separate survey from Barclays, also published on Tuesday, revealed that spending on credit and debit cards rose by 1.2% year-on-year in September, the biggest increase since April, following a 1.0% rise in August.

However, in real terms, this represented a fall as British consumer price inflation held at 2.2% in September, slightly above the Bank’s 2% target.

Official retail sales data for August showed a 2.2% rise in retail sales in cash terms, and a bigger-than-expected 1.0% volume increase.

Barclays noted that spending on discretionary items rose last month by the most since June, with entertainment spending jumping by 14.4%, the largest increase since July 2023 when U.S. singer-songwriter Taylor Swift opened sales for her British concert tour.

The bank attributed last month’s uptick in entertainment spending to ticket sales for concerts by British rock band Oasis, who are reuniting after a 15-year split.

In contrast, spending on essential items declined the most since April 2020, during the COVID-19 pandemic. Within that, spending on groceries fell for the first time since June.