UK CONSUMER spending fell for the fourth consecutive month in December, rounding off the worst year for household expenditure since 2012, new data shows.
Visa’s UK consumer spending index, released on Monday, showed that spending declined by one per cent on an annual basis, following a 0.9 per cent drop in November.
The figures showed a continued divergence between face-to-face and online spending. Expenditure in bricks-and-mortar shops fell by 2.7 per cent year on year, while e-commerce grew by two per cent – although this was a slowed rate of growth from November’s 2.4 per cent.
“The sustained drop in expenditure comes at a time when household purchasing power is being continually eroded by rising living costs and relatively subdued growth in pay packets,” said Annabel Fiddes, principal economist at IHS Markit.
“Meanwhile, consumer confidence remains relatively muted amid uncertainties over the strength of the UK economy and the ongoing Brexit negotiations.
“Looking ahead, the impact of the fall in the value of the pound since the Brexit vote is expected to subside and weaken inflationary pressures, and subsequently the squeeze on households’ budgets. This could help to lead to a relative improvement in the spend figures, but given the overall picture it seems unlikely that expenditure will bounce back to the levels of growth seen in 2016 anytime soon.”
Read more: Savings crisis ‘looming on the horizon’
“Four consecutive months of declining consumer spending is a clear indication of the impact that high inflation and stagnant wage growth is having on cash-strapped savers,” said Samantha Seaton, chief executive of personal finance app Moneyhub.
“The festive season is often a busy month for people’s money, but household finances are being squeezed left, right and centre and this isn’t showing any signs of improving, for the time being at least.”
Read more: FCA chief outlines consumer credit concerns