UK’s CONSUMER spending has fallen for the first time in nearly four years. According to Visa’s UK Consumer Spending Index, this is the first fall in household expenditure since 2013.
The study further shows that four of the eight broad spending categories noted lower spending volumes compared to one year ago. Transport and communication (-7.9%), and clothing and footwear (-5.2%) noted the strongest rates of reduction. Household goods (-4.1%) saw the quickest drop in spend since March 2013.
Food and drink retailers saw a marginal decline in expenditure in May (-0.6%). Split by channel, household spending declined solidly through face-to-face channels (-0.3%) — the quickest drop since April, 2012. On the other hand, e-commerce posted a 6.9% rise in spend after a marginal fall in April (-0.3%).
Kevin Jenkins, MD, UK and Ireland, Visa said, “Bricks-and-mortar retailers had a particularly challenging month, with sales dropping at the quickest level in over five years, at a time when warmer weather and the May bank holidays would usually drive shoppers on to the high street. Online retailers, on the other hand, fared well, with spend up 6.9%.”
Annabel Fiddes, economist at IHS Markit, which compiled the research on behalf of Visa, said that the outlook for consumer spending continues to look bleak, with households facing faster increase in living costs and muted wage growth. As the Bank of England forecasts faster increases in consumer prices in the coming months, Fiddes pointed to the relatively low levels of consumer confidence, uncertainty around the outcome of Brexit and a slowdown in the economic growth.
An increase in expenditure was noted in the miscellaneous goods and services category (which includes hairdressers and jewellery) at 7.1%; health and education at 6.7%; hotels, restaurants and bars at 3.3%; and recreation and culture at 2.2%.