A disappointing performance on the High Street has caused a continued fall in overall expenditure, according to a new Visa report.
Visa’s UK Consumer Spending Index for December 2018 revealed that the -1.0% year-on-year reduction seen in December was the fastest decline since April, having accelerated from a -0.7% decline in November.
The report, compiled by IHS Markit, also found that face-to-face expenditure fell by -1.6% on an annual basis in December, while eCommerce spending was up just +0.5% year-on-year.
Visa European principal economist, Adolfo Laurenti, said: “The further decline in UK consumer spending in December 2018 is a disappointment, but not a surprise. Notwithstanding a backdrop of low unemployment and rising wages, households remained very cautious at the end of the year - as they were for most of 2018.
“An acceleration in spending at hotels, restaurants and bars (+7.6% year-on-year) suggests that some categories of discretionary spending are holding up better than the market as a whole. And the modest pickup in ecommerce point to the resilience of digital channels of distribution, a favourable long-term trend that recent woes have not derailed.”
IHS Markit principal economist, Annabel Fiddes, said: “December’s CSI data show a disappointing end to 2018, with household spending failing to pick up in the run-up to Christmas. The sustained fall in expenditure throughout the fourth quarter of 2018 coincides with a marked drop in consumer confidence, as uncertainty around the UK’s impending exit from the EU continues to dampen sentiment.
“Alongside relatively weak UK PMI survey data, which signalled muted business activity in December, the spend figures add to evidence that the UK economy is likely to have slowed in the final quarter of 2018.”