Quick News Bit

Consumers shrug off inflation and keep spending


Consumer spending remained robust in March despite inflation at a 30-year high eroding the value of pay packets.

Net consumer credit rose by £1.3 billion, above the £1 billion average of the previous six months but below the £1.6 billion recorded in February, according to the latest data published by the Bank of England.

The rise in spending was driven by an £800 million rise in borrowing on credit cards. Inflation reached 7 per cent in March, and could hit double digits later this year, the Bank warned.

The figures are the first to capture the period after Russia’s invasion of Ukraine at the end of February. The economy had begun to recover after the lifting of Covid restrictions in late January before the war pushed prices up even further and created uncertainty for consumers and businesses.

The data shows that households were still willing to spend, according to Paul Dales, chief UK economist at Capital Economics, the consultancy. “Part of the strength may be because some households are having to borrow as higher inflation means their incomes aren’t stretching as far,” he said. “But most of it probably reflects a continued willingness to spend.”

Households continued to add to their savings, with bank deposits rising by £6 billion in March, in line with the average over the past six months. The savings figure is higher than the average of £4.9 billion saved per month before the pandemic, which means that the value of “excess” savings accumulated during the pandemic rose to £186.4 billion, up from £185.3 billion in February.

Samuel Tombs, chief UK economist at the Pantheon Macroeconomics consultancy, said: “Households’ continued unwillingness to touch the savings they accumulated during the pandemic suggests that real expenditure is set to fall [in the second quarter] in response to the squeeze on disposable incomes.”

The number of mortgages approved for house purchases fell to 70,700 in March, down from 71,000 in February. Economists polled by Reuters had expected a bigger drop to 70,000. However, mortgage approvals remain higher than their pre-pandemic average of 66,500 per month between 2015 and 2019.

For all the latest Business News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment