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Its data comes as shop prices soar at the fastest rate for more than 10 years and fears the cost-of-living crisis will reduce discretionary income for the poorest households by nearly 20 percent. Discretionary income is what’s left after taxes and essentials like household bills, food and clothing.<\/p>\n
The central bank overseen by governor Andrew Bailey says last month’s surge in borrowing was due to a boom in credit card spending.<\/p>\n
It rose by a record £1.5 billion in February, after a fall of £411 million in January. The previous record leap in credit card borrowing was £1.3 billion in March 2004.<\/p>\n
Consumer borrowing was up by just £143 million at the start of the year as people opted to repay credit cards.<\/p>\n
Economists say February’s turnaround points to people turning to plastic in the face of the money squeeze.<\/p>\n
Thomas Pugh, economist at RSM, said: “The figures suggest consumers are increasingly borrowing more to protect their lifestyles from the inflation surge.<\/p>\n
We expect to see higher borrowing and lower saving over the rest of the year as the cost-of-living crisis starts to bite.”<\/p>\n
Meanwhile, Retail Economics and financial technology group HyperJar expect consumer spending, a key driver of economic growth, to fall by £12 billion due to the pressures on personal finances.<\/p>\n
They estimate the cost of energy, fuel, food and other items will reduce the average family’s annual disposable income by 6.5 percent – or £430.<\/p>\n
However, for the poorest households, that hit will be 19.5 percent – or £850.<\/p>\n
Retail Economics chief Richard Lim said: “We’re likely to see recessionary behaviours kick in for many households who will cut back on the nice-to-haves and prioritise low costs.”<\/p>\n
Shop price inflation hit 2.1 percent in March, up from 1.8 percent in February.<\/p>\n
It’s the biggest hike since 2011 and the fifth consecutive month of inflation. Overall retail inflation was up 3.3 percent in March.<\/p>\n