New fears for future of high street retail as spending hits five-year low
THE Christmas shopping month of December rounded off the worst year for consumer spending since 2012, according to an index.
Households’ spending fell by 1% annually in December, following a 0.9% annual decrease in November, Visa’s UK Consumer Spending Index found.
Last year marked the first annual decline in consumer spending in five years, down 0.3% compared with 2016.
Those behind the report said that while the high street has suffered recently, online spending has held up.
Online spending increased by 2% annually in December, while faceto-face spending on the high street saw an annual fall of 2.7%.
Annabel Fiddes, principal economist at IHS Markit, which compiles the report, said: “Spending over the course of 2017 fell slightly on an annual basis for the first time in five years.
“The sustained drop in expenditure comes at a time when household purchasing power is being continually eroded by rising living costs and relatively subdued growth in pay packets.
“Meanwhile, consumer confidence remains relatively muted amid uncertainties over the strength of the UK economy and the ongoing Brexit negotiations.”
Looking ahead, she said that while there could be some relative uplift in the spending figures, “it seems unlikely that expenditure will bounce back to the levels of growth seen in 2016 any time soon”.
Looking at different types of spending in December, households’ spending on transport and communication fell by 4.4% annually, while spending on household goods decreased by 3.4% and spending on clothing and footwear fell by 2.4% over the same period.
Spending on recreation and culture fell by 1.8% annually, the fourth month in a row of falls.
Spending on hotels, restaurants and bars remained a “bright spot”, the report said, with spending up by 4.7% annually in December, marking a five-month high.
Food and drink retailers saw spending increase for the first time since September, albeit at a relatively small annual rate of 0.4%.
Mark Antipof, chief commercial officer at Visa, said: “Christmas rounded off a lean year for retailers, with consumer spending seeing its first consistent 12-month decline since 2012.
“December’s consumer spending figures confirm our earlier prediction that the UK would see its first fall in overall Christmas spending in five years.”
He continued: “Despite some large retailers signalling a strong Christmas performance, it is clear that the high street has suffered recently, while online spending has held up.
“This is emphasised by the torrid year for face-to-face expenditure, which continued in December as face-to-face spending was again outstripped by e-commerce, a trend we have witnessed in 11 of the last 12 months.”
The index uses spending on Visa cards as a base and adjusts the figures to reflect all consumer spending, not just that on cards.