UK spending growth slips to slowest rate since 2013 in first quarter of year, Visa says

Household expenditure increased by 1 per cent in March on the same month last year – a fall from 1.3 per cent in February 

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The Independent Online

The first three months of 2017 marked the slowest quarter for spending growth in the UK since 2013, as consumers started to feel the pinch of inflation and fretted against a backdrop of general economic uncertainty.

Figures published by Visa on Monday show that household expenditure increased by 1 per cent in March on the same month last year – a fall from 1.3 per cent in February – which takes the average annual growth rate for the quarter to 0.9 per cent from growth of 2.7 per cent in the final quarter of 2016.

“Our data suggests that consumer spending is beginning to slow from the strong levels seen in late 2016, as rising prices increasingly squeeze household purchasing power,” said Kevin Jenkins, Visa’s managing director for the UK and Ireland.

But he added that although the quarter marked the weakest for growth since the final three months of 2013, there were some pockets of resilience.

The leisure and hospitality sectors saw growth of 7.2 per cent and 4 per cent respectively, which Mr Jenkins said “confirms an ongoing trend of consumers prioritising experiences”.

Spending in the food, beverages and tobacco sector declined by 0.4 per cent, while clothing and footwear and household goods fell by 0.2 per cent. The biggest fall was in the transport and communication sector where sales fell by 2.2 per cent.

The Visa figures also chime with data from accounting firm BDO published last week, which showed that UK high street sales failed to grow for a fourth straight month in March.

The number of people hitting the shops actually rose compared to the same month last year, according to data from Springboard cited by the BDO, but retailers struggled to convert buoyant footfall into bricks-and-mortar sales.

Mr Jenkins said that Visa’s data also shows “consumers increasingly favouring ‘clicks’ over bricks and mortar shops”.

Online retailers actually saw spend up 8.2 per cent in March, from an increase of 3 per cent in February, marking the strongest monthly growth rate since Black Friday boosted November’s figures, Visa said.

Monday’s report is based on spending on all Visa debit, credit and prepaid cards which are used to make an average of over 2.3 billion transactions every quarter and account for £1 in £3 of all UK spending, according to the company.