Consumer spending fell by 0.2% in October, while hotels, bars and restaurants experienced the slowest increase in spend since February 2017 of just 1%.
Visa’s UK Consumer Spending Index, compiled by IHS Markit, signalled a renewed fall in consumer spending at the start of the final quarter of 2018. Although the rate of reduction was only slight (-0.2% year-on-year), this marked the first reduction for three months.
Household spending trends have been relatively subdued in 2018 to date, with expenditure falling in six of the ten months so far.
After rising in the prior two months, Face-to-Face spending fell on an annual basis in October (-2.0%). Furthermore, the pace of decline was the quickest recorded for six months.
In contrast, spending through eCommerce rebounded in October, rising by +2.6% compared to a year ago.
Adolfo Laurenti, European Principal Economist, Visa, commented:
“A dip in October spending, particularly pronounced for Face-to-Face expenditure, dispels the sense of optimism that a few months of small gains had generated during the summer.
“No doubt this disappointing reading will cause some concern for high street retailers as we head into the key Christmas shopping period.
“We look at improvement in wages and an easing in inflationary pressures as factors that may fuel hopes for some much-needed respite for retailers following what has been a very difficult year to date.”
Annabel Fiddes, Principal Economist at IHS Markit, said:
“The latest set of Visa CSI data signalled a renewed fall in household spending at the start of the fourth quarter, with expenditure down -0.2% compared to a year ago.
“The reduction appeared to be predominantly driven by reduced spending on the High Street, which declined -2.0% on an annual basis. In contrast, eCommerce expenditure rose at the quickest pace for just over a year (+2.6%), to suggest a further shift to online spending ahead of the Black Friday shopping period.
“However, the overall picture suggests a relatively disappointing performance in terms of household spending in the year to date. Notably, expenditure has only risen in four months of 2018 so far.”