UK consumer spending declined for a third consecutive month in November, putting 2017 on track to be the worst year for expenditure since 2012, new data reveals.
Figures published by Visa on Monday show that household spending fell by 0.9 per cent on the same month a year ago, following a 2.1 per cent decline in October.
On Britain’s high streets, expenditure fell for a seventh month in a row when calculated on an annual basis – by 3.5 per cent overall. That wasn’t quite as bad as the 5.1 per cent decline recorded in October, but still marks one of the worst monthly figures since 2012, Visa said.
The company said that even a 2.4 per cent increase in e-commerce spending was “modest” in the context of the survey’s history.
“November’s poor performance means that we stand by our earlier prediction that the UK will see its first fall in overall Christmas spending by consumers since 2012,” said Mark Antipof, chief officer for commercial at Visa.
“It would appear that consumers are making further changes to their shopping priorities as a result of the increasing strain on household budgets. Cutbacks on big-ticket items such as car purchases and bookings for Christmas trips abroad led to the largest drop in spending,” he added.
Six of the eight broad spending categories that Visa monitors registered lower spending during the month, with clothing and footwear putting in the second to worst performance after transport and communication. Spending on food and drink declined by 1.8 per cent and household goods expenditure fell by 2 per cent.
The two categories that enjoyed spending growth were hotels, restaurants and bars, where spending increased by 4.2 per cent, and a category described as “miscellaneous goods and services” which includes jewellery and hair and beauty products. Spending in that sub-sector rose by 4.9 per cent.
“Overall, the figures add to the relatively downbeat assessment of UK consumer spending, as households’ budgets continue to be squeezed by rising living costs and lacklustre wage growth,” said Annabel Fiddes, an economist at IHS Markit.
Inflation has risen sharply over the past year, spurred by a drop in the pound since the June 2016 Brexit vote. But wage growth has lagged, putting a strain on households’ spending power.
“Unless the squeeze on households unwinds and consumer confidence strengthens, it seems unlikely that consumer spending trends will improve anytime soon,” Fiddes said.