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UK Consumer Spending Index October 2019: October sees marginal drop in household spend

13/11/2019

Visa’s UK Consumer Spending Index, compiled by IHS Markit, indicated that expenditure fell on an annual basis for the thirteenth month in a row during October. That said, the rate of decline softened from -2.3% on the year in September to -1.1%, to indicate the weakest pace of contraction for six months.

Household spending also slipped on a month-on-month basis (-0.3%). However, the three-month-on-three-month measure showed an increase (+0.2%) for the first time since January. Expenditure split by channel showed a renewed increase in eCommerce spend (+1.1% year-on-year), which ended a two-month sequence of decline. At the same time, Face-to-Face expenditure fell at a softer pace compared to September (-2.4%).

Adolfo Laurenti, European Principal Economist, Visa, commented:

“Consumer spending was once again muted in October as household spending declined -1.1% year-on-year, according to Visa’s latest UK Consumer Spending Index. That said, there are a couple of silver linings in the report. First, the pace of decline abated from -2.3% year-on-year in September, offering some hope that spend will stabilise as we approach the crucial holidays shopping season."

"Second, eCommerce posted a renewed increase in spend (+1.1% year-on-year), ending a two-month sequence of decline. This trend highlights the ‘tale of two retails’, where bricks and mortar shops continue to face challenging headwinds, while eCommerce channels are faring relatively better. Finally, several categories appear to be close to a turning point – despite suffering declines in October, we are particularly hopeful that Food & Beverages, Health & Education, and Hotels, Restaurants & Bars could return to growth before the end of the year.”

Annabel Fiddes, Principal Economist at IHS Markit, said:

“Household spending across the UK fell again in October, according to latest Visa CSI data, albeit only slightly. Despite the overall downward trend, there were some signs of improvement when looking at the more detailed datasets.ECommerce spending increased for the first time in three months, while the majority of sectors noted softer falls in expenditure compared to September."

“However, it seems unlikely we will see a meaningful recovery in expenditure trends until there is greater clarity around the outlook, as economic and political uncertainty continues to weigh heavily on both consumers as well as businesses.”

Read Visa's UK Consumer Spending Index October 2019

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