Strong uplift in consumer spending

Consumer spending recorded its strongest increase for two and-a-half years in May as people turned to more traditional ways of buying goods such as the high street and mail order companies, a report has found.

Overall consumer expenditure grew by 1.3% year-on-year according to Visa, marking the biggest annual increase seen since October 2010.%VIRTUAL-SkimlinksPromo%
This is in spite of the unseasonably cold weather hitting demand for summer clothing and garden furniture as parts of Britain were covered in sleet and snow.

The uplift was boosted by more shoppers being tempted onto the high street in May, where consumer spending saw its fastest annual increase since September last year, showing a 1.3% uplift.

The rise in high street spending, together with a 1.3% annual increase in consumers turning to mail and telephone ordering, offset a small 0.2% year-on-year decline in online spending, according to the report, compiled for Visa by Markit.

The strongest year-on-year increases in consumer spending were recorded in the miscellaneous goods and services category, which includes trips to the hairdresser, personal effects such as jewellery and financial services such as insurance premiums. Hotels and restaurants saw the next biggest uplift, followed by the transport and communication sector.

The biggest annual drops were seen in the health and education and food, drink and tobacco sectors. Spending on clothing, household goods and recreation and culture were also down on the same period a year ago.

Chris Williamson, chief economist at Markit, said the report adds "to a picture of an economy that is on the mend, but progress is frustratingly slow".

Mr Williamson said that growth is still being held back by the pressure on household budgets caused by high living costs and stagnant wages.

He continued: "However, the nicer weather enjoyed in recent days may lead to a welcome June bounce in pent-up summer-related spending and provide an extra boost to the economy."

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Strong uplift in consumer spending

This takes time, but once you know the cost of a phone call, putting the dryer on, or a bag of potatoes, it enables you to judge far better how much you can afford to consume.

Once you know the base price, you are in a position to keep your eyes open for a better offer. If you see a discount you can judge for yourself whether it actually constitutes a bargain. For bigger things like utilities it enables you to do a proper price comparison and see if you can cut your bills.

Don't just assume that the premium range is better, try the every-day brand, or even the basic version and see if you spot the difference. Likewise, consider trading down your supermarket from one of the big players to local markets or discounters like Aldi.

If you plan what you buy to match what you actually cook and eat then not only will you be able to budget far more effectively, but you'll also waste much less and find your money goes further without you having to try.

If you can't think of a way to get your meat for less, consider a vegetarian day once a week. If you can't find petrol any cheaper, then work on making your driving as efficient as possible. The more you can think of clever alternatives the less you will have to make painful cuts to make ends meet.

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