Buying on credit muted as Brits accept rising inflation

Shoppers are less inclined than before to flash the plastic, Bank of England figures have shown.

Its numbers for December showed the smallest rise in consumer credit for 18 months as households took on an extra £1 billion in credit-card and consumer-loan debt during — the lowest amount since May 2015.

The latest figures indicate rising caution as a two-year sweet spot of near-zero inflation comes to an end, and the rising cost of living threatens to squeeze household budgets this year.

They will also soothe concerns at the Bank, voiced recently by Governor Mark Carney, over runaway consumer spending.

“December’s slowdown will likely be of considerable relief,” IHS Global Insight’s Howard Archer said.

Although annual credit growth is still more than 10%, the rate of growth fell for the first time since July, and the latest rise is also well below the £1.6 billion average over the last six months.

But the figures also revealed a sharp £2.1 billion drop in loans to businesses, with large companies accounting for the lion’s share of the fall. Lending to smaller firms dropped by £300 million over the month.