May witnessed a net increase of £603 million in other loans and advances which was the largest since December 2010. This was a rise from £439 million in April.
However, consumers continue to be careful with their credit cards. In May, Bank of England figures showed that there was modest net borrowing of £70m on credit cards after a net repayment of £60m in April.
Howard Archer at Global Insight said:
“The appreciable pick up in unsecured consumer credit in May is a surprise but it may have been affected by some people having to borrow more as a consequence of the extended squeeze on their purchasing power.”
“Latest data from the Office for National Statistics show that households’ real disposable income fell 0.9pc quarter-on-quarter in the first quarter of 2012 after a similar drop in the fourth quarter of 2011.”