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Consumer spending falls in January for first time in five years
UK consumer spending fell in January for the first time since 2013 in what was the eighth decline in the past nine months, the latest spending data from Visa showed.
Overall expenditure last month dropped back 1.2% year-on-year, following the 1% reduction witnessed in December.
Face-to-face sales fell for the ninth month in a row, quickening to 4% from December's 2.6% drop-off, and while ecommerce sales expanded 1.5% year-on-year, that figure still marked the lowest rate of expansion for the sector since its current upturn began in May 2017.
Mark Antipof, chief commercial officer at Visa, said, "Consumer spending entered the New Year on a downbeat note, falling for the eighth time in the past nine months, as Britons continued to cut back on spending. Clothing, furniture and household goods bore the brunt of consumers' caution yet again, while spending on the British high street, in general, fell sharply as the traditional January sales failed to bring shoppers out in numbers this year."
Expenditure fell across the majority of spending categories, with transport and communication seeing the steepest rate of reduction at 6.5%, followed by recreation and culture which posted its strongest decline in almost seven years at 4.3%.
Clothing and footwear spending was dialled back 2.0% in January, while household goods purchases declined 1.7%.
Annabel Fiddes, principal economist at IHS Markit, said, "Latest Visa UK CSI data signalled a disappointing start to the year, with consumer spending falling for the fifth month in a row on an annual basis. This suggests the weak expenditure trends in 2017 have carried through into 2018, as households continue to face rising living costs and lacklustre wage growth."
But it wasn't all doom and gloom, as spending at Britain's hotels, restaurants and bars saw a 3.7% uptick throughout the month and miscellaneous goods and services, which includes the health and beauty and jewellery subcategories, grew 6.1% on last January.
"Subdued spending trends coincide with a slowing of the overall UK economy during 2017, while the PMI surveys for January point to a further softening of growth momentum at the start of the year. Lingering uncertainties around the outcome of the ongoing Brexit negotiations are also weighing on consumer confidence, which has stayed well below the levels seen prior to the 2016 Brexit vote," Fiddes continued.
"However, labour market conditions remain tight, with employment at a record-high, which is expected to place greater upward pressure on earnings growth going forward. Combined with forecasts of cooling inflationary pressures over the coming months, these factors could lead to a relative improvement in expenditure trends as the squeeze on pay-packets unwinds, although overall trends are likely to remain largely subdued in the current economic environment," she concluded.