Consumer spending grew 4% in December, a festive boost to an otherwise muted 2017 fourth quarter.
Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows the month outperformed the Q4 average of 3.2%, the first occasion in three months when spending outpaced the rate of inflation.
But while shoppers loosened purse strings to enjoy Christmas and take advantage of seasonal sales, they are predicted to remain cautious into 2018 following months of rising prices and stagnant wage growth.
Q4 spend growth was weaker in comparison to the same period in 2016 (4.8%), dragged down by muted monthly figures of 2.4% in October and 2.8% in November – partially driven by careful spending in response to inflationary pressures.
Growth in both essential (3.7%) and discretionary (4.2%) spending climbed above the prevailing rate of inflation to help boost December’s figure.
But despite the majority of consumers increasing their spending across the board, the proportion of those expressing confidence in the UK economy remains relatively low at 34% – particularly when compared to the 61% who said they do not feel confident.
This gap in sentiment has steadily widened from September 2016 when the proportion of those feeling confident (48%) was greater than those who were not (47%).
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