Consumer spending declined yet again in March, report says

Visa report says household spending is down
Visa reports says consumer spending has dropped yet again in MArch (Source: Getty)

Consumer spending by UK households continued to decline in March, according to Visa’s UK consumer spending index.

The index showed that year-on-year spending dropped 2.1 per cent last month. This follows from a one per cent annual drop in consumer expenditure during February.

Spending fell on average by 1.4 per cent year-on-year over the first quarter and marks the worst quarterly performance since the fourth quarter of 2012.

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Face-to-Face expenditure fell to -3.0 percent on the year, down from -2.4 per cent in February. E-commerce was also affected as it dropped to -1.2 per cent during the same period. This is the first time both spending channels have fallen since September 2013, the report said.

Transport and communication was the weakest performing sector, which dropped to -8.6 percent over a twelve-month period. The report also noted declines in household goods (-5.8 per cent), recreation and culture (-5.6 per cent) and clothing and footwear (-2.7 per cent).

Only two sectors recorded an increase in spending during the month: food and drink saw consumer expenditure rise to 5.7 per cent, its third monthly increase in a row. The struggling hotels, restaurants and bars sector also had some good news as its annual growth rate steadied at 4.2 per cent.

The report has blamed poor weather for much of the decline, as the so-called ‘Beast from the East’ deterred shoppers during February and March, but said other causes must also be considered.

Mark Antipof, chief commercial officer at Visa, said: “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. 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.”

The UK consumer spending index, which was compiled by economists at IHS Markit, tracks real spending on Visa debit and credit cards and includes adjustments to reflect overall consumer spending.

According to Visa, its cards make an average of over 2.3bn transactions every quarter and account for £1 in £3 of all UK spending.

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