UK consumer spending stays weak as fashion falters says Visa
There was a modest reduction in UK consumer spending last month, according to card payment specialist Visa. It said Monday that spending fell 1.1% year-on-year, which followed a 1.2% reduction in January.
Overall, that was the worst start to the year since 2012. Given that most surveys recently have talked about the worst figure since 2013, this Visa survey ads on another year and looks even more bleak as a result.
And the index for February shows that overall household spending has now fallen in nine of the past 10 months.
Spending split by channel indicated that weakness continued to stem from physical stores, with ‘face-to-face’ spend down 2.5% compared to last year.
Although that was a big reduction, it marked the weakest rate of decline since last June, so maybe there was some good news there.
But as e-tail spending meanwhile increased only slightly, rising at the slowest pace for 10 months in February (+0.2%), that good news was shrort-lived. Until now, the relentless rise of online shopping has been retail’s saving grace and has provided some relief for the fashion sector which sells a lot of its products online.
As far as overall spending was concerned, the biggest decline was seen in consumers going out and having fun, but fashion spending also fell, by 1.6%. If you take into account the fact that inflation is running at about 3% and that February is the month when lots of new season merchandise appears in stores, that 1.6% drop looks even worse.
At least the category that Visa calls Misc. Goods & Services (which includes health, beauty and jewellery) was up a healthy 4%. Of course, given that health is in that category it could have been about consumers buying cold and flu cures as much As anything else. But we've already seen in previous months that beauty is buoyant, and with Valentine's Day coming in February, it would be nice to think that the increase was partially accounted for by lovers buying each other rings, necklaces, and earrings.
Mark Antipof, Chief Commercial Officer at Visa, said of all this: “Britons have been in belt-tightening mode since last summer. February’s cold snap certainly didn’t alleviate this situation, particularly when we shine a spotlight on high street spending, and recreation and culture in particular, which saw its biggest decline since April 2010.
“On the other hand, hotels, restaurants and bars experienced another strong month. The resilience of this sector is somewhat unique, having reported uninterrupted growth since February 2011.
“As we look ahead into March, consumer spending is at risk of posting one of the worst Q1 results on record. Retailers will no doubt be hoping that the milder weather will put a spring in shoppers’ steps.”
Annabel Fiddes, Principal Economist at IHS Markit, which compiles data, said: “The latest Visa UK CSI data pointed to a further modest reduction in consumer spending. The High Street remained a key source of weakness, seeing spend fall for the 10th month in a row, while growth in e-commerce spending continued to disappoint.
“Rising living costs, lacklustre wage growth and relatively subdued consumer confidence are all likely playing a part in the ongoing reduction in household spending. Unless the squeeze on incomes subsides, it looks unlikely that household spending will pick up any time soon.”
Copyright © 2022 FashionNetwork.com All rights reserved.