The first quarter of 2018 saw consumer spending drop by the most in over five years according to the latest report by payments company Visa.
Inflation-adjusted spending fell by 1.4 per cent in the first quarter of this year when compared to the same period in 2017, representing the largest fall since the fourth quarter of 2012. The latest fall followed a drop of 1.3 per cent in the previous quarter.
Consumer spending in March alone fell by the most since October, down 2.1 percent on the year after a 1.0 percent fall in February.
Online sales also fell for the first time in ten months, meaning the overall economy slowed in the first part of the year.
Heavy snow falls were thought partly to blame by Visa, along with a dip in confidence felt my many UK households.
However, Mark Antipof, chief commercial officer at Visa, commented: ‘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.’
The only areas that saw a rise in spending during March were food, hotels, restaurants, and bars. This was thought to be as a result of Easter falling early into March.
Official retail sales figures, due this week, are also expected to show a fall in spending in March.
Visa’s data is based on spending on its debit, credit, and prepaid cards, which account for about a third of consumer spending. The growth rates are adjusted for inflation, seasonal effects and differences between typical card and cash spending.
Better news is also expected this week when official figures are predicted to show the strongest wage growth in nearly two-and-a-half years at 3.0 percent in the three months to February, while inflation is forecast to have held at 2.7 percent, according to a Reuters poll of economists.