Consumer spending in 2017 hits lowest level in five years

Last year was the first annual decline in consumer spending since 2012, as December sales reported lower than expected, according to data from Visa and IHS Markit.

December saw household expenditure fall by 1 percent, following the similar 0.9 percent decrease in spending in November. The lower than expected festive spending has led to a 0.3 percent decline for the whole year, the first drop in five years.

The figures reveal that face-to-face spending fell by 2.7 percent compared to the previous year, to mark the softest rate of reduction for four months, however, spending in this category has now fallen continuously since last May.

Online spending growth also slowed to 2 percent from 2.4 percent in November, which Visa and IHS Markit states expose the weaker rate of expansion in that channel than seen in recent years.

Spending by sector showed that five of the eight broad categories registered lower expenditure on an annual basis at the end of 2017, with clothing and footwear slowing declines of 2.4 percent.

Mark Antipof, chief commercial officer at Visa, said: “Christmas rounded off a lean year for retailers with consumer spending seeing its first consistent 12 month decline since 2012. December’s consumer spending figures confirm our earlier prediction that the UK would see its first fall in overall Christmas spending in five years. This result has bucked the trend of the previous four years which saw annual consumer spending rise by an average of 1.7 percent.

“Despite some large retailers signalling a strong Christmas performance, it is clear that the high street has suffered recently, while online spending has held up. This is emphasised by the torrid year for face-to-face expenditure, which continued in December as face-to-face spending was again outstripped by e-commerce, a trend we have witnessed in 11 of the last 12 months.