Consumer spending cooled in December after post-Brexit spending spree

Helen Cahill
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Department stores were hit as spending softened (Source: Getty)

Consumer spending cooled towards the end of 2016, pointing to a slowdown in Britain's spending spree following the Brexit vote.

In October and November, consumer spending growth hit 5.5 per cent and 5.1 per cent respectively, according to Barclaycard. But this figure fell to four per cent growth year-on-year in December.

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Spending on the UK high street was flat, with growth of just just 0.3 per cent overall. Clothing spend fell 0.3 per cent, and spending in department stores was even harder hit, down 3.5 per cent as compared to the same month in 2015.

How this has impacted ket retailers such as John Lewis and Debenhams will become clear when they post trading updates on Thursday.

Recent figures from accountancy firm BDO told a similar story. Their analysis showed like-for-like sales growth was minus 0.1 per cent in December - the fourth December of contraction in a row.

Online retailers such as Asos and AO World - which will also publish trading updates on Thursday - should have more to celebrate. Barclaycard's figures show online spending jumped 15.1 per cent in December.

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Paul Lockstone, managing director of Barclaycard, said the consumer spend softening "could be an early indication of things to come".

"Consumers seem to have entered 2017 with more caution, citing worries about inflation and the triggering of Article 50," Lockstone said. "Looking ahead, all eye will be on whether this year will see households begin to feel squeezed by rising prices, leading to a sustained fall in consumer spending on discretionary items in favour of their day-to-day essentials."

The British Retail Consortium has predicted that sterling's slide will lead to inflation hitting three per cent this year. Barclaycard said some of the spending growth in December could be attributed to price rises.

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