LONDON — British credit card borrowing grew at the fastest annual rate since 2005 in the 12 months to July, Bank of England data showed on Tuesday, in a potential sign that households are struggling to make ends meet as the cost of living soars.
Credit card borrowing rose by a net 740 million pounds ($869 million) on the month, down from a 945 million-pound increase in June but 13.0% higher than the year before, the biggest annual increase since October 2005.
“The most vulnerable have run out of quick fixes, which is why we continue to see considerable growth in demand for credit,” Paul Heywood, chief data and analytics officer at credit scoring agency Equifax UK, said after the data.
Consumer price inflation hit a 40-year high of 10.1% in July and regulators plan to increase household energy tariffs by 80% in October. Further increases are likely in January.
Broader consumer credit, which also includes unsecured personal loans and overdrafts, rose by 1.425 billion pounds – roughly in line with economists’ expectations in a Reuters poll – and grew at the fastest annual rate since March 2019, up 6.9%.
Mortgage approvals for house purchase edged up to 63,770 from a downwardly revised June reading of 63,184, and exceeded economists’ forecasts in a Reuters poll for a drop to 61,725. ($1 = 0.8516 pounds) (Reporting by David Milliken Editing by William Schomberg)