Consumer spending growth slows to five-month low

British consumers spending increased by just 0.4 percent year-on-year in January, according to the latest UK Consumer Spending Index by Visa, which indicates that consumer spending is starting to lose momentum.

January’s slow growth of 0.4 percent marks not only a decrease on December’s 2.5 percent growth, but also a five-month low and aside from August, shortly after the Brexit vote it is the weakest annual growth rate in over three years, Visa said.

Visa managing director Kevin Jenkins said: “Following a bumper Christmas season, there were signs that consumers were starting to rein in their spending at the start of the New Year. Annual growth slowed down from 2.5 percent in December to a five-month low of 0.4 percent in January, as households monitored rising prices on everyday items and how this would impact disposable incomes.”

High street retailers took the biggest hit, with expenditure on clothing and footwear dropping 3.8 percent on the year, the fastest annual reduction since April 2012, while spending on household goods also declined by 2.7 percent.

Face-to-face spending also declined at its quickest rate in three years, dropping 3.1 percent, while e-commerce continues to hold its own, growing by 4.1 percent, albeit at a slower pace, said Visa.

Jenkins added: “Clothing and household goods retailers experienced a particularly difficult January. The traditional start of year sales did little to lift clothing spend, which saw the biggest drop in nearly five years. The high street as a whole suffered a disappointing month too, with spend falling at the quickest rate in four years.”