Household spending rose to pre-crisis levels last year and family spending power grew at its fastest rate in more than two years.
Weekly spending rose to £572.60 in the year ending March 2018, the highest since 2005 after adjusting for inflation, the Office for National Statistics said today.
Family spending power was also £11.37 – 5.8 per cent – higher in December compared with the previous year, according to the Asda Income Tracker, the fastest growth since August 2016.
The ONS said the jump in UK household spending ran alongside the employment rate, which rose to a then-record high of 75.6 per cent in the first quarter of 2018.
Low interest rates also provided a disincentive to save and encouraged spending, it said.
While the figures may be another encouraging sign for the economy, Zurich analyst Alistair Wilson said it “masked” a more worrying issue.
He said: “Household spending has been fuelled by borrowing or people dipping into their savings – a trend that will come back to bite.
“Families are feeling the pinch now but putting expenses on credit, or clearing out savings, will leave people exposed to future financial shocks.”
The latest Asda Income Tracker, for December last year, found the average family had £207 of discretionary income to spend each week, a 5.8 per cent rise on December 2017.
It said the strong labour market and falling inflation had led to the spending power boost.
Cebr economist Kay Neufeld said: “It makes for very positive reading, providing much optimism for the coming months with discretionary incomes up across the country, inflation ticking downwards and a strong labour market.”
He added: “Despite this however, consumer sentiment remains fragile and households are fairly cautious about actually spending money due to the uncertainties that lie ahead – retail sales around the holidays in particular were disappointing.”