Strong growth has been recorded for items such as clothing, games consoles and flat-screen televisions, and consumers are expected to continue this steady buying trend up to Christmas.

Owner of UK fashion group Arcadia, Sir Philip Green, said that although the group has reported a slight rise in annual profits, the spending spree is close to an end. However, “It won’t be until the first quarter of next year that we really see the impact of the credit crunch,” he said.

Clothing company Talbots predicted similar difficulties and has updated its autumn season financial outlook accordingly. “Although we have seen a modest improvement in our sales trends over the last few weeks, we remain very cautious in our fourth quarter outlook, given the continued uncertainty of the economic environment,” said president and chief executive officer, Trudy Sullivan.

Rising interest rates and a crackdown on lending must eventually catch up with shoppers, but although there appear to be signs of caution, the full impact of the current financial climate is yet to be recognised by consumers.

Mortgage prices are set to rise, while property prices could fall, and new tax rules could hit some people’s wallets hard. Meanwhile, tightening of lending criteria means that those relying on credit to pay for everyday items, and those applying for mortgage loans, could find themselves in difficulty.

According to Nicholas Hopkins in the Daily Mirror, UK personal debt increases by £1 million every four minutes, and people who are reliant on borrowing are looking at a “long debt sentence”.

A report from the British Bankers’ Association shows that credit card spending totalled £6.7 billion in September, three per cent less than in September 2006. However after allowing for weaker repayments and seasonal adjustment, lending increased by £70 million. Also after adjustments, new lending on personal loans and overdrafts rose by £114 million year-on-year in September.

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