The latest Visa UK Consumer Spending Index data pointed to a further solid increase in household spending at the end of 2016. On an annual basis, expenditure was up +2.6%, which was down slightly from November’s 22-month record of +3.1%. Nonetheless, this rounded off the best quarter for two years, with expenditure rising at an average annual rate of +2.8% through the final quarter of 2016.
Only four of the eight broad spending sectors saw increased expenditure during December. Growth was led by Hotels, Restaurants & Bars (+7.3%), where the rate of expansion
rebounded from November. Recreation & Culture also noted a steep increase in spending during December (+6.4%).
Kevin Jenkins, UK & Ireland Managing Director at Visa commented:
Consumer spending continued to increase solidly in the run up to Christmas, rounding off the fastest growing quarter for two years. Average year-on-year growth for each month in Q4 2016 was 2.8%, twice as high as the average rates for Q2 and Q3.
Online retailers enjoyed strong sales over the whole Christmas period, while bricks and mortar retailers saw an improvement, after a disappointing dip in November, as consumers made a last minute dash for gifts on the high street.
Growth was once again led by the experience sector, with consumers going to Christmas markets, travelling to visit loved ones, or venturing to various parts of the country to celebrate. Food was, unsurprisingly, another sector which performed well, with spend up 2.9%. Spend on clothing and household goods, however, fell in December following a Black Friday boost in the previous month.
Josh Beer, The Illustrious Pub Company, Cambridgeshire said “We had an excellent December in terms of revenue growth. The mild weather coupled with the fact that Christmas Day and New Year’s both fell on Sundays, gave our customers more opportunities to host parties at our pubs throughout the festive period. The year end is a crucial time for us, as revenue can be double that of an average month, so we were pleased to find people treating themselves to more extravagant dinner options.”