UK consumer spending sees first rise in clothing and footwear in two years

Consumer spending on clothing and footwear rose in 3.6 percent in July, the first increase in three years, according to Visa and HIS Markit’s monthly consumer spending index.

Household expenditure rose +2.4 percent on the year in July, after -6.5 percent decline in June. E-commerce spending soared at record pace, up 16.2 percent as consumers shopped online during lockdown. Face-to-face expenditure fell by -6.9 percent.

The figures echo the re-opening of the economy, which saw restrictions related to Covid-19 eased further. Adolfo Laurenti, European Principal Economist, Visa, commented: “The July Visa UK Consumer Spending Index indicates the first positive annual growth in household spending since the pandemic began. Throughout July weekly mobility and transportation improved, supporting this growth. Face-to-face transactions remain below 2019 levels, however as stores reopened the decline in spend improved from -20 percent to -7 percent year-on-year.”

Annabel Fiddes, Economics Associate Director at IHS Markit, said: “E-commerce continued to benefit from a surge in spend, rising by a record +16.2 percent compared to a year ago, while the downturn in High Street expenditure eased notably.

Sector data also moved in a positive direction, with spending rising across half of the monitored categories and declining at softer rates across the remaining sectors.”

“The path to economic recovery remains fragile, however, with the UK economy likely to take some time to get back to pre-pandemic levels of output. At the same time, the winding down of the government’s furlough scheme is likely to push up unemployment and, combined with weaker pay trends, could hinder any future rises in household consumption.”

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