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UK Consumer Spending Index January 2020: Household spending continues to fall at the start of 2020

20/02/2020

Visa’s UK Consumer Spending Index, compiled by IHS Markit, showed that overall household expenditure continued to fall at the start of the year. Consumer spending declined -1.6% year-on-year in January, which was quicker than the -1.1% drop seen in December.

On a monthly basis, expenditure decreased -0.5%, which was softer than the -1.9% reduction seen in December. However, the three-month-on-three-month measure was flat (0.0%), to end a period of growth that began last October.

Channel data indicated that spending fell across both eCommerce and Face-to-Face categories in January. While eCommerce was boosted by a later than usual Cyber Monday during December, expenditure through this channel fell back into decline at the start of 2020. Face-to-Face spending meanwhile fell for the ninth month in a row.

Adolfo Laurenti, European Principal Economist, Visa, commented:

“Consumer spending in 2020 got off to a slow start with a fall of -1.6% year-on-year, led by a -2.5% drop in face to face expenditure. ECommerce was also down marginally, by -0.7%, a notable contraction when compared to December 2019’s +3.9% rise.

“January’s weak performance wasn’t contained to any one single spend category, with seven of the eight categories we track in negative territory for the month. Hotels, Restaurants & Bars was the only category to register an uplift, seeing a strong +4.5% rise.

“Although we might have hoped to see the UK’s stabalising political environment give consumers a reason to loosen their purse strings, the reality is that global macroeconomic headwinds continue to grow. It would be a brave move to forecast a marked improvement in the situation during the coming months.”

Annabel Fiddes, Principal Economist at IHS Markit, said:

“The latest Visa UK CSI data showed a further drop in overall household spending at the start of 2020, with the annual rate of decline quickening slightly from -1.1% to -1.6%. 

“While the later than usual timing of Cyber Monday helped to boost eCommerce expenditure in December, spending through this channel fell back into contraction territory in January, while the High Street continued to struggle and saw spend decline for the ninth month running. Broken down by sector, Hotels, Restaurants and Bars provided some glimmer of hope, and registered a solid increase in spend. However, expenditure fell across all other monitored areas, led by Clothing & Footwear.

“As there is still a degree of uncertainty over the outlook, as well as signs of slowing global growth, expenditure trends and economic performance are likely to remain relatively subdued in the months ahead. “

Read Visa's UK January 2020 Consumer Spending here.

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