Consumer spending dips for fourth consecutive month
The Visa UK Consumer Spending Index showed spending declined by 1%, similar to the 0.9% reduction seen in November. High Street spending was particularly weak, but e-commerce remained on an upward trajectory, up 2% in December. The index is based on total spending on Visa credit, debit and prepaid cards, which account for £1 in every £3 spent in the UK.
Consumers are spending more on eating and drinking out, rather than buying physical items. Mark Antipof, chief commercial officer at Visa, said: “Hotels and restaurants were again a bright spot in December’s results. Consumers have been opting to spend on UK staycations as opposed to physical items and trips abroad. Interestingly, clothing and footwear, and household goods, two categories that might be expected to perform strongly in the lead up to Christmas, saw significant drops of -2.4% and -3.4% respectively.”
He added: “Christmas rounded off a lean year for retailers with consumer spending seeing its first consistent 12 month decline since 2012. December’s consumer spending figures confirm our earlier prediction that the UK would see its first fall in overall Christmas spending in five years. This result has bucked the trend of the previous four years which saw annual consumer spending rise by an average of 1.7%.”
Spending by sector showed that five of the eight broad categories registered lower expenditure on an annual basis at the end of 2017. The largest reduction was seen for transport & communication (-4.4%), while marked declines were also seen in household goods (-3.4%) and clothing & footwear (-2.4%).