Business

High street spending 'saw biggest annual fall for six years in April'

UK households are spending less, according to a study by Visa

HOUSEHOLDS' high street spending saw its biggest annual fall for six years in April, according to an index.

Face-to-face spending on the high street fell by 5.4 per cent year-on-year, accelerating from a 2.9 per cent drop in March, according to the Visa UK Consumer Spending Index - which said the high street remains a "key source of weakness".

Online spending also dipped, by 0.1 per cent - a gentler decline than the 1.1 per cent fall seen in March.

Visa said that overall, spending fell by 2 per cent annually in April, matching a decrease in March.

Consumer spending has now fallen in 11 of the past 12 months, with the index suggesting that 2018 is on track for its worst performance since 2012.

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

Annabel Fiddes, principal economist at IHS Markit, which compiles the report, said: "Consumer spending remained relatively weak in April, with no signs of a bounce-back from March when the drop in spend was likely exacerbated by adverse weather.

"Notably, the high street remained a key source of weakness amid recent reports of struggling retailers and store closures, and recorded the quickest drop in expenditure for six years in April.

"At the same time, UK economic growth has slowed, and the recent revival in wage growth has so far failed to translate into improved expenditure trends, adding to fears that spending will remain subdued in the coming months."

Looking at different types of spending, expenditure on household goods was down 6.1 per cent year-on-year, followed closely by recreation and culture, which fell by 5.6 per cent.

Spending on food and drink fell at the quickest pace since September 2013 - by 4.6 per cent - after an Easter-related boost in March.

Clothing and footwear retailers saw the steepest decline in spend for six months at 3.5 per cent.

Higher spending was registered for health and education, up by 5 per cent annually, and hotels, restaurants and bars, though growth in the latter softened to the weakest for eight months, with a 2.9 per cent annual increase.

Mark Antipof, chief commercial officer at Visa, said of the latest figures: "Low confidence levels amongst shoppers and the gloomy outlook for the UK economy are likely to have contributed to this continued caution.

"It is clear that consumers remain in belt-tightening mode, with discretionary spending on furniture, electrical appliances and recreational activities worst-hit.

"Retailers will be pinning their hopes on further improvements in household finances and warmer weather leading to a more upbeat few months heading into summer."

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