UK Finance has warned that while consumer spending has remained stable in the second quarter of the year, but there are "tough times ahead".

Total spending on credit and debit cards was upwards of £75 billion, an increase of £3 billion compared to the previous quarter.

The trade association attributed higher spending to price hikes driving up average spend, including more expensive petrol and food.

However, the volume of transactions also increased, particularly in the travel sector.

UK Finance said that increased borrowing for larger purchases could relate to consumers taking out personal loans earlier than planned to lock in today’s prices as inflation is forecast to rise even further in the coming months.

The figures show that household savings that were built up through the pandemic largely remained stable but did not grow, reflecting “higher costs constraining people’s ability to save money”.

Overdraft levels rose gradually in the second quarter, at around £5.5 billion, while total overdraft debt remains five per cent below the levels seen prior to the pandemic.

“Household spending was stable in the spring, with increased personal loan borrowing,” said Eric Leenders, managing director of personal finance, UK Finance. “We understand that some consumers are making larger purchases earlier than planned to stay ahead of inflation.”

He added: “As we head into the autumn, the pressure on household finances will increase and we anticipate a drop in consumer spending and house-buying activity. Anyone struggling with their finances should get in touch with their lender as soon as possible to discuss support available to them.”

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