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It appears the rush to the petrol pumps by panicked motorists has delivered a big boost to consumer spending, with a big jump in Visa card spending at petrol stations in March
The fuel tanker dispute has been lambasted by business leaders as threatening a fragile recovery in the UK. But perhaps there is some – albeit short and sharp – economic upside after all.
It appears the rush to the petrol pumps by panicked motorists has delivered a big boost to consumer spending.
UK spending rose 0.4% in March on the month and 0.3 percentage points of that increase was as a result of spending at petrol pumps, according to the latest Visa Europe UK Expenditure Index compiled with data specialists Markit.
Steve Perry, commercial director at Visa Europe commented:
“Last week’s petrol panic had a tangible impact on overall consumer spending in March as drivers sought to stockpile fuel … Unadjusted domestic Visa card spending at UK service stations was up 22.7% in March compared against February. It is a rare occurrence when one consumer trend has such a sizeable effect on overall spending and it highlights the scale of the spending that took place in the last few days of the month.”
But before anyone gets too excited, even with the petrol panic, the underlying trend in consumer spending remains subdued. Economists will also be quick to point out that last week’s fuel rush is unlikely to have constituted a net boost to overall spending given it was simply people moving the timing of a purchase they would probably eventually make anyway. Also, any extra money spent on fuel took away from household budgets for spending on other items.
The Visa Europe index, based on card transactions that account for Â£1 in Â£3 of all UK spending, still shows spending fell 1.7% in annual terms in March. The three-month on three-month trend improved, but remained negative at -0.4% compared with -1.2% in February.
So for anyone looking at the official retail sales data due out on 20 April, to get a true picture of spending it will be more important than ever to look at the measures that exclude automotive fuel.