Christmas celebrations boost overall consumer spending for December

Alys Key
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Consumers using Visa spent money on going out and jetting off this December (Source: Getty)

Visa cardholders spent more in the final quarter of 2016 than they had for two years, according to Visa’s UK Consumer Spending Index, pointing toward a solid increase in household spending.

The monthly report showed that consumer spending in December was up 2.6 per cent on the year in December with online purchases leading the way.

E-commerce grew by 5.5 per cent, which was higher than the series average, though showed a slight slow-down from a record high of 12.4 per cent in November. The overall increase in expenditure was largely accounted for by the growth in online purchases.

In contrast, face-to-face expenditure rose only 0.7 per cent. This, however, was an improvement on the dip of 1.5 per cent in November, and was likely boosted by last-minute Christmas shopping on the High Street.

People who were travelling and partying for Christmas added a boost in the two best-performing categories. Expenditure at hotels, restaurants and bars grew by 7.3 per cent, while spending on recreation and culture was up 6.4 per cent.

Josh Beer of The Illustrious Pub Company in Cambridgeshire said: “The mild weather coupled with the fact that Christmas Day and New Year’s both fell on Sundays, gave our customers more opportunities to host parties at our pubs throughout the festive period.”

Of the eight categories monitored by the index, half saw an increase in December compared to a year ago. Food, beverages, and tobacco reported growth of 2.9 per cent and transport and communication was also up 1.2 per cent.

Imogen Hawthorne of Pasley Immy Cakes in Birmingham sensed that greater indulgence in food for the festive season helped to drive sales. “The orders that we’ve had have been more extravagant with customers treating themselves to generous portions over the Christmas period.”

Shopping, however, experienced a decline at the end of the year. After increasing in the previous two months, clothing and footwear expenditure was down by 1.1 per cent. Household goods spending fell by 0.7 per cent.

Kevin Jenkins, UK and Ireland managing director at Visa, suggested that the growing popularity of Black Friday had boosted clothing and household goods in the previous month, but that this led to a fall in December.

Annabel Fiddes, an economist at IHS Markit, said that the figures showd that the UK economy was in a strong overall position, but that “rising inflationary pressures could squeeze spending power, and, along with Brexit-related uncertainty, this could soften the overall growth trajectory of household spending.

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