UK consumer spending dips as fashion suffers says Visa

By

Sandra Halliday

Published
Jun 12, 2017

May was a difficult month for UK retail with consumers cutting back on their spending for first the time in almost four years as uncertainty over the economy, the post-Easter dip, and an expected election-linked slowdown all added to the mounting woes.

Fashion was among the biggest categories to suffer during the month and an online spending rise failed to take up the slack.

New data from credit and debit card firm Visa showed that consumer spending dipped 0.8% year-on-year last month and dropped 1.9% compared to April.

Visa said the effects of inflation and stagnating wage growth seemed to have hit home and with last week’s election results and the start of Brexit negotiations this month, June is unlikely to provide much relief to retailers.

Inflation could even worsen as the pound fell further against the US dollar and the euro on Friday. An Institute of Directors survey on Monday also showed that business confidence has sunk “through the floor”.

Back with the May report, according to Visa, physical stores saw their biggest sales fall in over five years, despite the warmer weather that should have given sales a bigger boost. And while online sales rose 6.9%, they couldn’t make up for the shortfall. That was particularly a problem for the fashion sector with clothing one of the categories with the biggest sales falls.

Annabel Fiddes, an economist at IHS Markit, which compiled the data for Visa, said: “The outlook for consumer spending continues to look relatively bleak, with households facing faster increases in living costs and muted wage growth.”