GRAHAM HISCOTT Spending falls as Brexit bites Price inflation at four-year high

The number of payments made using cards soared to 1.4 billion in June, a record high and up 12% over the past year. A total of £57.1billion was spent, up 7% on June last year, and the average value of a purchase via plastic was £41.36, according to trade body UK Finance. Contactless payments accounted for 34% of all card transactions, while 13% were made online. BRITISH households are buckling under the pressure of Brexit, higher inflation and stalling wage growth a decade on from the start of the credit crunch.

The Bank of England’s monthly Agents’ Summary of Business Conditions report for August, which talks to 700 businesses nationwide, found that consumer spending growth had fallen compared with last month. This was blamed on shop prices beginning to rise as a result of the Brexitinduced plunge in the value of sterling. Firms reported that prices for goods and services had risen at the fastest pace in four years.

“Some contacts ascribed this to increased caution among consumers and to consumers trading down to cheaper products or brands,” the Bank of England said. It added that as a result, businesses serving UK consumers were suffering with sales growing at their slowest pace in four years.

However, export-focused manufacturers – which benefit from a weak pound – did better, delivering their fastest expansion since 2011.

The report, which the Bank’s Monetary Policy Committee considers when assessing interest rates, showed businesses were also only planning to offer pay awards of between 2 and 3%.

This compares unfavourably to the present inflation rate of 2.6% and the 4%-a-year growth in pay experienced by British workers before the financial crisis.

“Overall employment intentions remained modest,” the Bank of England said, adding that “growth in manufacturing employment intentions was stable.”

The report also stated that Brexit uncertainty continued to weigh on some businesses’ longterm spending plans.

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