Visa’s UK Consumer Spending Index, compiled by IHS Markit, pointed to a weak start to 2019, with expenditure falling for the fourth month running. Moreover, household spending was down -1.3% year-on-year in January (-0.9% in December) to signal the most marked fall since April 2018.
A further decline in spending on the high street drove the latest fall in overall household expenditure. Face-to-Face spending was down -1.5% year-on-year, following a -1.6% reduction in December. eCommerce spending also dipped into contractionary territory, however, ending a three-month sequence of growth. Expenditure was down -0.2% on an annual basis.
Adolfo Laurenti, European Principal Economist, Visa, commented:
“A further decline in UK consumer spending in January (-1.3% year-on-year) is no surprise and is consistent with the trend we’ve noted in recent months. The trend in Face-to-Face sales (which dropped -1.5 percent year-on-year in January) is also reflected in eCommerce spending, which suffered its first negative reading since September. Over the medium term, we are confident that a robust job market, improvement in wages and salaries, and modest inflation will be the ingredients of a rebound.”
Annabel Fiddes, Principal Economist at IHS Markit, said:
“The latest set of Visa CSI data show that UK households continued to trim back spending at the start of 2019, with expenditure down -1.3% on the year to mark the quickest fall since April 2018.
“The reduction in overall spend occurred alongside a marked deterioration in consumer confidence, which is currently the weakest since 2013, as uncertainty continues to mount over the future relationship of the UK and the EU. Uncertainty has also hit the wider economy, with the PMI surveys showing business activity broadly stagnating at the start of the year. Compounded by signs of a wider global economic slowdown, it’s likely that the UK economy will struggle to grow through the opening months of 2019.”