December decline in consumer spending caps 2017's five year low
Consumer spending in the UK fell in December and 2017 was the first full year to show a decline for five years, according to credit and debit card data revealed on Monday.
On an annualised basis, retail spending in the key festive trading month declined 1% in real terms, figures from Visa and IHS Markit showed.
Compared with November, expenditure dropped 2.6% after sliding in seven of the preceding eight months, which resulted in 2017 falling 0.3% versus 2016, the first annual decline in five years.
Even though inflationary pressures caused by the fall in the value of the pound since the Brexit referendum are expected to subside in the coming months, it seemed “unlikely that expenditure will bounce back to the levels of growth seen in 2016 any time soon”, said Annabel Fiddes, principal economist at IHS Markit.
Face-to-face spending in shops during the month of Christmas fell 2.7% to again be outstripped by e-commerce for the 11th month of the year even though online growth fell to 2% from 23.4% in the month before.
December was another month in 2017 where hotels and restaurants were a bright spot, said Mark Antipof, Visa's chief commercial officer.
"Consumers have been opting to spend on UK staycations as opposed to physical items and trips abroad. Interestingly, clothing and footwear, and household goods, two categories that might be expected to perform strongly in the lead up to Christmas, saw significant drops of -2.4% and -3.4% respectively.”
Retail spending has been hit as household face subdued growth in pay packets alongside rising inflation, with the outlook also clouded by uncertainties over the UK economy and Brexit.