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Spending falls for first time since 2013

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Consumer spending fell for the first time in nearly four years in May as shoppers started to feel the squeeze of rising prices and stalling wage growth.

Overall spending was down 0.8% on the year last month, the first recorded fall since September 2013, according to Visa.

Spending on transport and communication fell by 7.9% annually, while spending on clothing and footwear was down by 5.2%.

Household goods saw the quickest drop in spend since March 2013, down 4.1%.

Food and drink retailers saw a marginal decline of 0.6% in May.

In contrast, spending on hotels, restaurants and bars was up 3.3%, while miscellaneous goods and services including hairdressers and jewellery was up 7.1%.

‘Bricks and mortar’ retailers had a particularly challenging month, with spending down 5.3%. But online retailers posted a 6.9% rise in spend.

Annabel Fiddes, economist at IHS Markit, which compiled the data for Visa, said: “The outlook for consumer spending continues to look relatively bleak, with households facing faster increases in living costs and muted wage growth.

“The squeeze on household finances is likely to get worse as the Bank of England forecasts faster increases in consumer prices in the coming months.”

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