Households put brakes on spending

HOUSEHOLD spending growth was at its weakest level in over five years during the first three months of 2018 amid the cold weather and waning consumer confidence, according to an index.

Spending fell by 1.4 per cent yearon-year across the first quarter of this year – marking the worst quarterly performance since the fourth quarter of 2018, Visa’s UK Consumer Spending Index found.

Overall consumer spending fell by 2.1 per cent annually in March, with face-to-face spending on the high street down by 3 per cent year-on-year. Online spending decreased by 1.2 per cent annually – the first time in 10 months there has been a decline and the fastest rate since 2012.

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.”

Spending on transport and communication plunged by 8.6 per cent annually in March, while spending on recreation and culture fell by 5.6 per cent.

Food and drink was the best-performing category in the index in March, likely boosted by the run-up to Easter, Visa said, with a 5.7 per cent annual increase in spending.

Hotels, restaurants and bars were another bright spot, with a 4.2 per cent annual increase in consumer expenditure in this category.

The index uses spending on Visa cards as a base and the figures are adjusted to reflect all consumer spending, not just that on cards.

Annabel Fiddes, principal economist at IHS Markit – which compiles the report, said: “Consumer spending continued to decline at the end of the first quarter, though the latest reduction in spend was likely exacerbated by the recent spate of bad weather.”

She continued: “While we could expect to see a relative improvement in the numbers next month as weather conditions normalise, the underlying trend remains relatively weak.”

‘E-commerce spend fell for the first time in 10 months’