Consumers are continuing to rely on borrowing to boost their budgets, with figures from the Finance & Leasing Association (FLA) showing growth in several areas of credit lending.
In a year-on-year comparison to May, store instalment credit saw the biggest increases. This rose by 28% to £249m.
Lending for car finance also soared by 24% to reach £1,398m in May this year. Credit and personal loans make up the largest share of consumer credit lending (£2.8 billion) but only inched up by 1% in the year to May 2012.
Further findings from the FLA research also showed that some areas of credit lending declined over the year. Store card lending tumbled by 16% to reach £123m.
“In-store instalment credit is proving increasingly popular with consumers, who are responding to the attractive and flexible offers which are available,” said Fiona Hoyle, Head of Consumer Finance at the Finance & Leasing Association. “This is helping customers buy essential household goods, at a time when many families have to manage their budgets even more carefully.”
Figures released by the Bank of England (BoE) also mirror those of the FLA. They show that total consumer borrowing nearly doubled in a month-on-month comparison to May, rising from £379 million to a staggering £732 million.
This figure has exceeded the monthly average of £400 million recorded over the last six months, according to the BoE.
Commenting on the reasons behind this increase, Howard Archer, chief UK economist at IHS Global Insight, speaking to The Daily Telegraph, said: “It may have been affected by some people having to borrow more as a consequence of the extended squeeze on their purchasing power.”
Despite this fact, the current levels of unsecured consumer credit still fall well below the average of £1.1 billion a month recorded in 1993.
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