UK consumers have cut their spending in the run up to Christmas according to the latest figures release by credit card company VIsa.
Inflation-adjusted consumer spending last month was 0.9 per cent lower than in November 2016. This was a smaller decline than October?s 2.1 per cent fall, but still enough to make an annual drop in spending likely for the first time since 2012 for both the Christmas season and 2017 overall according to Visa.
Expensive purchases saw the biggest fall, with spending on cars and Christmas trips abroad falling, whilst cheaper luxuries such as beauty treatments and cosmetics saw gains.
Visa executive Mark Antipof commented: ‘People opt for smaller treats, at the same time tightening their belts when it comes to larger purchases.’
Online sales saw a boost at the end of November due to black Friday discounts, but this came at the expense of physical high street stores.
Inflation in the UK held at a five year high of 3.0 per cent for the third month running, leaving wages failing to keep pace and consumers tightening their belts. This is expected by the British Chamber of Commerce (BCC) to persist throughout 2018.
The BCC cut its forecasts for 2017, 2018 and 2019, seeing growth of 1.5 per cent this year, slowing to 1.1 per cent in 2018 and only partially recovering to 1.3 per cent in 2019.
BCC economist Suren Thiru said: ‘Continued uncertainty over Brexit and the burden of upfront cost pressures facing businesses is likely to stifle business investment, while falling real wage growth is expected to continue to weigh on consumer spending.’
Britain and the EU agreed on a Brexit divorce deal on Friday, enabling them to begin talks about trade and a two-year transition period that will start when Britain leaves the EU bloc on March 29, 2019.
However, businesses said they would need to see a clear transition agreement as soon as possible for them to be able to put contingency plans on hold.