UK consumer spending weakens after rare online reverse, Visa finds

By Oliver Haill

Date: Monday 08 May 2017

UK consumer spending weakens after rare online reverse, Visa finds

(ShareCast News) - Consumer spending growth in Britain weakened to one of the slowest rates for more than three years, getting the second quarter off to a slow start.
Research by Visa compiled by Markit found household spending grew 0.5% year on year on a seasonally adjusted basis, slowing from the 1% rate in March and the average annual growth rate for the first quarter as a whole.

Spending online fell for the first time since 2013, with a 0.1% decline April after rising 8.2% increase in March.

Negative spending was seen in three sectors: health and education fell 9.5%; transport and communication was down 9.2%; and household goods saw a drop of 3.4%. Sector spending was not adjusted for seasonality.

The hotels, restaurants and bars sector was the best-performing, with expenditure up by 9.2%, which was attributed to Easter and the extended half-term break, while likewise food and drink retailers saw their steepest increase in spending volumes for three years of 5.9%, as sales were boosted by Easter eggs and hot cross buns.

Clothing and footwear registered the strongest rise in expenditure for six months, of 2.3%, as shoppers took advantage of mid-season sales or shopped for warmer weather abroad.

Recreation and culture, which includes cinemas and book shops, meanwhile saw spending growth of 2.8%, the sector's slowest rate for eight months.

Visa said consumer spending slowed further in April as a result of consumers tightening their belts in the face of rising prices running up against stalling wage growth.

Economist Annabel Fiddes at IHS Markit said: "The latest Visa Consumer Spending Index numbers signal a further slowdown in consumer spending growth at the start of Q2... Moreover, it was one of the slowest rates of expansion seen for over three years.

"The trend of relatively modest expenditure growth is likely to extend in to the coming months, as consumers are squeezed by both rising living costs and relatively lacklustre wage growth. Furthermore, consumer confidence remains subdued, with households and businesses alike facing ongoing uncertainty around the outcome of the Brexit negotiations, the upcoming General Election, and concerns of a slowing UK economy."


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