Britons spend on rollercoasters and beaches over DIY and clothes; China inflation slows – business live
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Britons are cutting back on DIY and households goods purchases, but are splashing out on one-off treats such as holidays and days out, according to a report from TSB entitled How Britain spends.
There was a 9.2% increase in spending with airline and travel companies between January and June compared with a year earlier.
People spent more on entertainment such as concerts, theme parks, going to the cinema and theatre (up 5.1%), with spending on amusement parks jumping by 20.2%.
Spending in pubs is also up, by 7.2% — driven by spending over Easter and the May Bank holidays rather than during the euro tournament, as spending in pubs fell by 2.5% in June compared to May.
As people try to manage their household costs, many are shelving renovations or home improvement projects, with overall spending on DIY, electrical and furniture falling by 15.5%. They also spent less on new clothes, down 4%.
As food price growth has slowed, supermarket spending has risen by 3.4%.
The report, a six-monthly analysis of TSB debit card transactions, shows consumers spent £9.5bn in the first half of the year. While this is up 1.7% compared to the same period in 2023, it is lower than the rate of inflation of 2%.
Delphine Emenyonu, head of loans and credit cards at TSB said:
While many household budgets are under pressure, consumers are remaining optimistic – with many prioritising spend on treats such as holidays and entertainment.
Consumers are feeling more confident about their finances, and with a potential interest rate cut later in August, we may see increased spending levels in the second half of the year.
In China, consumer prices grew for a fifth month in June, but less than expected, while producer price deflation persisted, with domestic demand in slow recovery mode despite Beijing’s support measures.
The Chinese government has sought to revive consumer demand following a lacklustre post-Covid recovery but people remain worried about the housing downturn and job insecurity.
The consumer price index rose 0.2% in June from a year earlier, compared with a 0.3% rise in May, according to the National Bureau of Statistics. Economists had expected an annual rate of 0.4%. Food prices fell by 2.1% year on year despite supply disruptions caused by poor summer weather.
Zhiwei Zhang, chief economist at Pinpoint Asset Management, said
The risk of deflation has not faded in China. Domestic demand remains weak.
The producer price index fell by 0.8% in June from a year earlier following May’s 1.4% decline.
Asian shares remained close to two-year highs hit at the start of the week. Japan’s Nikkei rose 0.6% while Hong Kong’s Hang Seng slipped by 0.1% and the Shanghai market fell by 0.57%.
Stocks have rallied on the back of growing expectations that the US Federal Reserve could start cutting interest rates soon, with Fed chair Jerome Powell saying yesterday that the US is “no longer an overheated economy”.
The Agenda
2.30pm BST: Bank of England chief economist Huw Pill speaks
3pm BST: US Federal Reserve chair Jerome Powell speaks
4.30pm BST: BOE policymaker Catherine Mann speaks on a panel at Manchester Business School