Visa’s UK Consumer Spending Index, compiled by IHS Markit, showed that overall expenditure continued to decline at the end of 2018. The -1.0% year-on-year reduction seen in December was the fastest seen since April, having accelerated from a -0.7% decline in November.
Looking over 2018 as a whole, expenditure has fallen in eight months of the year, underscoring a relatively weak overall picture of household spending. Lower expenditure was largely driven by a disappointing performance by the High Street, as Face-to-Face spending fell -1.6% on an annual basis in December.
Growth in eCommerce spend remained relatively subdued, with expenditure through this channel rising by just +0.5% year-on-year.
Adolfo Laurenti, European Principal Economist, Visa, commented:
“The further decline in UK consumer spending in December 2018 is a disappointment, but not a surprise. Notwithstanding a backdrop of low unemployment and rising wages, households remained very cautious at the end of the year - as they were for most of 2018. An acceleration in spending at hotels, restaurants and bars (+7.6% year-on-year) suggests that some categories of discretionary spending are holding up better than the market as a whole. And the modest pickup in ecommerce point to the resilience of digital channels of distribution, a favorable long-term trend that recent woes have not derailed.”
Annabel Fiddes, Principal Economist at IHS Markit, said:
“December’s CSI data show a disappointing end to 2018, with household spending failing to pick up in the run-up to Christmas. The sustained fall in expenditure throughout the fourth quarter of 2018 coincides with a marked drop in consumer confidence, as uncertainty around the UK’s impending exit from the EU continues to dampen sentiment.
“Alongside relatively weak UK PMI survey data, which signalled muted business activity in December, the spend figures add to evidence that the UK economy is likely to have slowed in the final quarter of 2018.”
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