Consumer spending decline continues as March rounds off worst quarter in over five years

More doom and gloom

Visa’s UK Consumer Spending Index pointed to a further decline in total household spending in March as bad weather caused disruption to both businesses and consumers.

On an annual basis, the rate of reduction quickened from -1.0 per cent in February to -2.1 per cent, to signal the steepest reduction since last October. On average,
spending fell by -1.4 per cent year-on-year over the first quarter, to mark the worst quarterly performance since Q4 2012.

Spending through both Face-to-Face and eCommerce channels declined compared to a year ago during March; the first time a broad-based reduction has been recorded since September 2013.

Face-to-Face noted the quicker rate of reduction (-3.0 per cent year-on-year), with the pace of decline slightly stronger than that seen in February (-2.4 per cent). Meanwhile, expenditure through eCommerce fell by -1.2 per cent on an annual basis, after registering only a slight increase in February (+0.3 per cent).

Mark Antipof, Chief Commercial Officer at Visa, commented: “The negative impact that the ‘Beast from the East’ had on UK economic activity last month has been widely reported, but this doesn’t entirely explain March’s lacklustre consumer spending. We are in the midst of a dip in consumer confidence and this – coupled with other economic factors – is causing shoppers to continue to restrain themselves.

“High street sales suffered once again, however it is also noteworthy that e-commerce spend fell for the first time in 10 months, and by its fastest rate since 2012. That said, it is too early to read a great deal into this year-on-year decline, which should be viewed in the context of high growth rates in early 2017.”