Biggest fall in spending by consumers in past five years

● Heavy snowfall seen as a factor in Visa index decline

Bad weather and the continuing squeeze on household budgets saw UK consumers cut their spending by the most in more than five years during the first quarter of 2018, figures from credit card giant Visa revealed yesterday.

Visa’s latest UK consumer spending index showed a further decline in total household spending in March as bad weather caused disruption to both businesses and consumers.

On an annual basis, the rate of reduction quickened from -1 per cent in February to -2.1 per cent, to signal the steepest reduction since last October.

On average, spending fell by -1.4 per cent year-on-year over the first quarter, to mark the worst quarterly performance since Q4 2012.

Mark Antipof, chief commercial officer at Visa, said: “The negative impact that the ‘Beast from the east’ had onuk 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.”

Official retail sales figures, due on Thursday, are also expected to show a fall in spending in March.

Inflation figures, to be released tomorrow are expected to show it held steady in March as a drop in food and fuel prices was offset by higher airfares around the earlier Easter holidays.

A consensus of economists forecast the Office for National Statistics’ (ONS) Consumer Price Index (CPI) to come in at 2.7 per cent for March, in line with February’s reading and holding below the 3 per cent recorded in January.

Consumers are believed to have benefited from slightly weaker food prices, which had surged on the back of the weaker pound, as well as a bigger month-on-month drop in fuel prices than a year earlier.

But air fares are likely to have helped offset the drop, having risen during the Easter bank holiday, which fell earlier in the calendar this year.

Martin Beck at Oxford Economics said he expects 2018 as a whole will see a steady decline in price pressures.