Shoppers on £12bn PPI spending spree as retail sales surge past 2008 peak Shoppers raiding savings, credit cards and using PPI payments Retail sales growing at fastest rate since 2008 Rise in spending driven by confidence that the economy is on the mend Shoppers are raiding their savings and using billions of pounds paid in PPI compensation by the banks to go on a spending spree. Retail sales are growing at their fastest rate since the peak of the consumer boom in early 2008. The increase is at odds with evidence that pay rises continue to lag behind increases in the cost of food, energy and transport. The money appears to be coming from savings, credit cards and the £12billion paid out by the banks to consumers who were mis-sold payment protection insurance alongside loans and credit cards. Spending power: Shoppers have spent £12bn from savings, credit cards and PPI payments The volume of retail sales in the three months from July to the end of September was up by 1.5 per cent on the previous quarter, according to the Office for National Statistics. The ONS said: "This is the largest quarter-on-quarter rise since March 2008 when the economy as a whole was at its peak, before the economic downturn." Car manufacturers and retailers say the PPI compensation has been a key factor. The quantity of retail sales in September was up by 2.2 per cent on a year ago, while their value was 3.2 per cent higher. Online shopping is growing particularly strongly, with the figure up by 19.1 per cent in September compared to a year ago. James McGregor, director of consultants Retail Remedy, said the rise in spending was driven by confidence that the economy was on the mend. He said: "The retail market continues to go from strength to strength, although its return will have many economists scratching their heads given where wage inflation is at. We've had a spate of upbeat economic data and people can hear and see this. More importantly, they can sense that things are improving. Spree: Retail sales are growing at their fastest rate since early 2008