Consumer spending fell for the third consecutive month in July, the biggest period of decline since 2013, a report has found.

Spending fell by 0.8% annually in July, following annual declines also recorded in May and June, according to Visa’s UK Consumer Spending Index.

It said the figures are further evidence households are feeling the squeeze from rising prices and stagnant wage growth.

Transport and communication recorded the biggest annual decline in spending in July, down by 6.1%. This was followed by a 5.2% year-on-year decline in clothing and footwear.

Spending on household goods, which has either fallen or stagnated every month since last December, fell by 4%.

Bucking the trend, spending on hotels, restaurants and bars jumped by 6% annually in July, while spending on recreation and culture also increased by 1.3%. The report suggested the figures may have been boosted by a surge in “staycations”, as falls in sterling have pushed up the cost of overseas trips.

The index, compiled by Markit, uses spending on Visa cards as a base and adjusts the figures to reflect all UK consumer spending, not just that on cards.

Annabel Fiddes, principal economist at IHS Markit, said: “Alongside the renewed squeeze on household budgets, uncertainties linger over the direction of the economy and the outcome of the ongoing Brexit negotiations, which is weighing down consumer confidence.

“All this makes it seem unlikely that consumer spending will recover in the current challenging conditions, and adds to expectations that the Bank of England will not hike rates anytime soon.”



Source

World News

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