It is well documented at the moment that the Bank of England governor has a tricky decision coming up around interest rates and if and by how much they could go up.
This news about consumer spending continuing to show resilience adds a little bit more pressure. We are all spending and eating out more, despite furlough ending and inflation at the highest for a decade.
However, how much of this is temporary - we have had so much news about supply chain issues and the fact we should get our Christmas shopping now, is the spending just earlier than in previous years, and will almost reverse as we get closer to Christmas?
The Bank of England have maintained that inflation is temporary, although their view has come under increasing challenge as the inflation number increases each time it is reported. With the number of employed people increasing despite the end of furlough in the most recent set of results, there must be a lot of pent up demand out there!
I wonder what data Santa will bring for Christmas 2021?!
UK consumer spending is showing resilience driven by early Christmas shopping and enthusiasm for eating out and entertainment despite surging inflation, intensifying pressure on the Bank of England to raise interest rates. Several factors threaten the rebound in household spending including inflation which has jumped to a decade-high, tax rises, surging gas prices and the withdrawal of Covid support for jobs and income. “But for now consumers remain resilient,” said Andrew Goodwin, chief UK economist at Oxford Economics, a consultancy. Both official and non-standard economic data have shown that despite the headwinds, consumer spending on goods and services rose in October and November. Early Christmas shopping helped retail sales return to growth last month, while spending in cinemas, bars and restaurants bounced back to pre-pandemic levels.