Spenders pull purse strings tighter in April

Elizabeth Fournier
UK SPENDING on Visa cards dipped in April following three months of growth, new figures show today, but strong online sales helped to keep household expenditure above the levels seen at this time last year.

Consumers spent 2.5 per cent less on their Visa cards last month than in March, marking the first time since December that household expenditure has fallen. But year-on-year spending increased for the second consecutive month, rising by 0.5 per cent compared to April 2012.

Strong growth in online spending – which rose 6.3 per cent year on year – was not enough to offset a marked drop in face-to-face transactions, which have fallen by 1.9 per cent since April 2012 despite showing a slight uptick during March.

Discretionary retail spend took a hit last month as squeezed shoppers splashed out more in the UK’s fast growing service sector.

Spending on food, beverages and tobacco slumped by 6.2 per cent year on year, while outgoings on transport and communication increased by 3.1 per cent and hotels and restaurants saw a 4.5 per cent rise.

“The overall picture of consumer spending is one of slow growth,” said Visa’s commercial director Steve Perry. “However, there is clearly continuing volatility from month to month with a marked decrease of minus 2.5 per cent from March.”

Meanwhile, data from accountancy firm BDO released yesterday shows retail sales rose by just over one per cent in April, driven by an uptick at the end of the month as the first signs of summer finally came to UK.

Like-for-like high street sales rose by 1.3 per cent last month, with non-store sales bouncing back after a subdued spring to rise 29.9 per cent month-on-month. While fashion sales only increased by 0.6 per cent overall, the sector saw a huge 13 per cent rise in the final week of the month as the weather warmed up.

But Mastercard’s SpendingPulse – which showed retail sales up 1.5 per cent in April – suggested spending had fallen over the key Easter holiday period, dealing a blow to retailers relying on the May bank holidays to drive spending.