CONSUMER spending growth hit a three-year low in the first quarter of 2017, in a sign that rising prices are hitting the public’s wallet.
Research by payments technology firm Visa has revealed that the rate of growth of consumer spending slipped annually from 2.7 per cent at the end of 2016 to 0.9 per cent in the first quarter of the year, the weakest quarter since the end of 2013.
The growth rate dropped to 0.7 per cent alone in March, according to the Visa UK Consumer Spending Index.
Consumers have still been digging into their wallets, but mainly online, with spending through e-commerce channels increasing by 8.2 per cent in March, up from three per cent in February 2017. This was the sharpest rate of growth since last November.
In comparison, spending on the high street declined 1.3 per cent annually, but that was an improvement on the 3.2 per cent decline recorded in February.
Kevin Jenkins, UK & Ireland managing director at Visa, said there were still pockets of growth in spending.
“Our data suggests that consumer spending is beginning to slow from the strong levels seen in late 2016, as rising prices increasingly squeeze household purchasing power,” he said.
“There were, however, still pockets of resilient growth in March with the leisure and hospitality sectors seeing growth of 7.2 per cent and four per cent respectively.
“The index confirms an ongoing trend of consumers prioritising experiences, as spend on food, clothing and household goods continued to trail behind.”
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Alistair Wilson, head of retail platform strategy at Zurich, said the figures show a slump in financial confidence.
“With Easter and the May bank holidays on the horizon, spending on leisure is also likely to increase,” he said.
“With interest rates low and inflation rising, it’s important to stash a little away whenever you can. Increasing the amount you pay into a workplace pension is a good way to do this, unlocking the tax efficiency and employer contributions, making what you put in go much further.
“If you haven’t yet started saving into a pension, the earlier you do this, the greater the benefits are likely to be.”