Consumer spending falls at fastest rate in four years

CONSUMER spending has fallen at its fastest rate in four years, displaying further evidence of the ongoing squeeze on household budgets.

IHS Markit and Visa’s UK consumer spending index revealed a two per cent year-on-year decline in spending during October.

This is the quickest rate of decline since September 2013, and it means 2017 as a whole is on track for its worst performance since 2012.

It is the fifth time in six months that the survey has registered a drop in consumer spending.

The report said trends have worsened in recent months as household budgets are being squeezed by stagnant wage growth and strong increases in the cost of living.

In addition, slower economic growth and Brexit uncertainty continue to weigh on consumer confidence.

“Furthermore, the recent move by the Bank of England to increase its benchmark interest rate could also weigh on household spending going forward,” the report added.

Read more: Inflation hitting higher income households hardest

Clothing retailers were the worst hit, suffering a nine per cent decline in spending – the biggest fall since the series began in mid-2009.

Annabel Fiddes, principal economist at IHS Markit, said: “The data add to evidence that falling real wages, muted consumer confidence and lingering uncertainties over the direction of the UK economy are having a substantial impact on spending.”

Last month, figures from the Office for National Statistics revealed households in Britain saw their spending power fall for the fourth consecutive quarter – the longest period of decline for almost six years.

Consumers also reported a worsening in their perception of their own financial situation.

Read more: Savings crisis ‘looming on the horizon’