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 said spending in shops increased by 2.0% in annual terms in September, the strongest uptick since March when it increased by 3.5% although less of a rise than the 2.7% recorded in September 2023.
Reeves took office in July following the Labour government's landslide election win and is set to deliver her first annual budget on Oct 30. She has warned some taxes will increase, although she has ruled out increases to the rates of income tax and National Insurance social security payments.
"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 sponsor 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, showed spending on its credit and debit cards rose by 1.2% year-on-year in September, the biggest increase since April after a rise of 1.0% 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.
In contrast, spending on essential items declined by the greatest amount since April 2020, during the COVID-19 pandemic. Within that, spending on groceries fell for the first time since June.
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