Spending is down as cost of living hits our budgets

HOUSEHOLD spending has dropped for the first time in almost four years, according to a report published today.

Many families are ‘starting to feel the squeeze’ as the rising cost of living eats into their pay packets, it said.

It added that household expenditure fell 0.8 per cent in May compared with 12 months earlier as consumers tightened the purse strings and reined in impulse purchases.

This is the first fall in spending since May 2013, according to the credit card firm Visa’s latest Consumer Spending Index.

Spending on clothes and footwear was down 5.2 per cent, and on household goods .1 per cent. Total ‘face to face’ spending in shops fell 5.3 per cent, but online spending rebounded from April, rising 6.9 per cent.

Kevin Jenkins, of Visa, said ‘bricks and mortar’ retailers have been the worst hit.

He added: ‘With rising prices and stalling wage growth, more of us are starting to feel the squeeze.’

The report comes as the Office for National Statistics prepares to publish the inflation figure for May tomorrow.

Economists predict the Consumer Prices Index will remain at 2.7 per cent – the highest level since September 2013.

Wage figures published the following day are expected to confirm that pay continues to rise more slowly than prices.

‘Starting to feel the squeeze’