UK CONSUMER spending dropped to its lowest level in over five years during the first quarter of this year, new data shows.
Visa’s UK consumer spending index has revealed a worsening decline in March with household spending down 2.1 per cent compared with a year earlier.
The decline continues a downward trend after the one per cent drop recorded in February.
On average, spending fell by 1.4 per cent year-on-year over the first quarter, to mark the worst quarterly performance since the final three months of 2012.
“The negative impact that the ‘Beast from the East’ had on UK economic activity last month has been widely reported, but this doesn’t entirely explain March’s lacklustre consumer spending,” Mark Antipof, chief commercial officer at Visa, said.
“We are in the midst of a dip in consumer confidence and this – coupled with other economic factors – is causing shoppers to continue to restrain themselves.
“High street sales suffered once again, however it is also noteworthy that e-commerce spend fell for the first time in 10 months, and by its fastest rate since 2012.
“That said, it is too early to read a great deal into this year-on-year decline, which should be viewed in the context of high growth rates in early 2017.”
Transport and communications was the worst performing sector suffering an 8.6 per cent drop compared with a year earlier while food and drink retailers performed with spending rising by 5.7 per cent.
“For the first two months of 2018, consumer spending saw the strongest reduction for the opening of a year since 2012, and it seems this trend is continuing,” Samantha Seaton, chief executive of personal finance app Moneyhub, said.
“It’s a tricky time for household finances, and despite an increase in the national minimum wage providing some respite for consumers, high inflation and low wage growth still have a tight grip on purse strings.
“With interest rates set to rise in May, it’s unlikely spending will truly pick up for a while.”