Business

Consumer spending 'on course for weakest year since 2013'

Household spending is on track to record its weakest year of growth since 2013, despite seeing an uplift in August, according to Visa's UK Consumer Spending Index

HOUSEHOLD spending is on track to record its weakest year of growth since 2013, despite seeing an uplift in August, according to an index.

Spending increased by 0.3 per cent year-on-year in August, marking the first increase since April, according to Visa's UK Consumer Spending Index.

But with average growth of 0.2 per cent each month this year, consumer spending is on course to record its weakest calendar year of growth since 2013, Visa said.

Online spending increased by 6.5 per cent annually in August, while face-to-face spending on the high street fell by 2.6 per cent over the same period - marking the fourth month of declines in a row.

Looking at different sectors, the biggest spending uplift in August was in miscellaneous goods and services, which includes jewellery, hair and beauty, with a 10.1 per cent annual increase. Hotels, restaurants and bars, and recreation and culture saw the next biggest annual spending increases, at 2.5 per cent and 2.3 per cent respectively.

Spending on clothing and footwear, and food and drink saw annual falls of 1.1 per cent and 0.7 per cent respectively.

Transport and communication spending was down by 3.4 per cent annually.

Kevin Jenkins, UK & Ireland managing director at Visa, said: "Spending on clothing was down in August, albeit at a slower rate than in July, despite a much hoped for back-to-school boost.

"Spend on transport and communications fell for the eighth consecutive month as consumers continued to shy away from big ticket items such as car purchases and air travel.

"On the other hand, the experience economy saw some success last month, possibly as a result of a rise in staycations due to the weakness of sterling...

"There was also evidence of the 'lipstick effect', with consumers spending more on small treats such as jewellery, beauty products and trips to hair salons, reflected in a 10.1 per cent increase in the miscellaneous category."

The index uses spending on Visa cards as a base, and the figures are adjusted to reflect all spending, not just that on cards.

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