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Creditfix LB 03-2017

UK Consumer Spending Falls Again

Consumer spending in the UK fell for the third month in a row in July, marking the longest continuous fall for over four years.

The latest research, compiled on behalf of credit card giant Visa by IHS Markit, shows that spending fell by 0.8 per cent when compared to the same month of July in 2016. The decline in spending represents an increase from the 0.2 per cent year-on-year fall seen in June.

The biggest spending fall was seen in transport and communications which showed a year-on-year decline of 6.1 per cent.

Spending on clothing and footwear also saw a dramatic fall of 5.2 per cent, while food and drink spending was only slightly down by 0.5 per cent.

Household goods spending fell by 4 per cent, which continues the downward trend that has seen either a drop or stagnation in spending every month since the beginning of 2017.

There was one bright spot amongst the gloomy outlook, with spending in bars, restaurants and hotels in the UK rising by 6 per cent when compared with July last year.

It is thought that the weakness of the pound against other currencies may have led to more British consumers holidaying in the UK rather than travelling abroad. This theory was backed by the fact that spending on recreation and culture also showed growth of 1.3 per cent after a slight decline in June.

Visa consider the latest figures to be further proof that rising prices and stagnant wage growth is having an effect on household spending power, causing families to rein in their spending.

Kevin Jenkins, Visa UK & Ireland managing director, said: ‘The drop in spending was felt across a broader range of retail sectors last month, with clothing, household goods, food and transport among the worst hit.’

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