Latest Visa UK Consumer Spending Index data indicated that consumer spending declined for the third month running in November. On an annual basis, total expenditure fell by -0.9%, which was less severe than the -2.1% reduction seen in October, but nonetheless kept spending on track for its weakest calendar performance for five years. Expenditure on the High Street declined for the seventh month in a row on an annual basis in November, declining by -3.5% overall. Although this marked an improvement from the -5.1% decline in October, it was still one of the strongest reductions recorded since 2012. Meanwhile, E-commerce spending continued on an upward trend, though the growth rate of +2.4%
Of the eight monitored categories, six registered lower spending including food, beverages and tobacco which was up 0.2% on October at -1.8%, with only hotels, restaurants and bars (+4.2%) and miscellaneous goods and services (+4.9%) reporting higher spending.
For operators hoping to capitalise on Black Friday, Visa claims it “failed to lift consumer spending,” as rising living costs, subdued earnings growth and consumer confidence continued to take their toll.
With total expenditure down by 0.9% in November – an improvement nonetheless on the -2.1% reduction seen in October – Visa said this keeps “spending on track for its weakest calendar performance for five years,” chief officer Mark Antipof commenting: “Festive cheer was in short supply for UK retailers during last month as Black Friday promotions failed to lift consumer spending.
“November’s poor performance means that we stand by our earlier prediction that the UK will see its first fall in overall Christmas spending by consumers since 2012.
Annabel Fiddes, principal economist at IHS Markit, added: “The latest Visa UK CSI data signaled a further drop in household spending in November, keeping 2017 on track for its worst performance for five years. The high street continued to struggle, and saw expenditure decline again in November, while online retailers saw only a modest upturn in spending volumes.
“Data broken down by sector meanwhile revealed a relatively broad-based reduction in expenditure, suggesting that households are cutting back on an array of goods and services. However, hotels, restaurants and bars (+4.2% on the year) and misc. goods and services (+4.9%) posted solid increases in spend, to provide the only two pockets of growth.
“Overall, the figures add to the relatively downbeat assessment of UK consumer spending, as households’ budgets continue to be squeezed by rising living costs and lacklustre wage growth. Unless the squeeze on households unwinds and consumer confidence strengthens, it seems unlikely that consumer spending trends will improve anytime soon.”