January clothing sales fell at the fastest rate in almost five years thanks to consumers keeping an eye on their budgets, according to new figures from Visa.
The credit card giant’s latest UK Consumer Spending Index found that spending on clothing and footwear went down by 3.8 per cent year-on-year, the worst drop in this category since April 2012.
The index also revealed that spending on the high street went down by 3.1 per cent last month, the strongest decline in four years.
Meanwhile, online spending increased by 4.1 per cent year-on-year, marking the slowest growth seen in five months.
Overall, spending was up by 0.4 per cent year-on-year last month, but this is a fraction of the 2.5 per cent increase recorded in December.
The news comes after the BDO High Street Sales Tracker last week revealed that UK high streets couldn’t recover from the 0.1 per cent drop in sales in December, with another 0.1 per cent decline in January.
The tracker also indicated that retail experienced its worst performance since 2013 as like-for-like sales fell into negative growth.
READ MORE: January sales worst for 4 years
“Following a bumper Christmas season, there were signs that consumers were starting to rein in their spending at the start of the New Year,” Visa UK managing director Kevin Jenkins said.
“Annual growth slowed down from 2.5 per cent in December to a five-month low of 0.4 per cent in January, as households monitored rising prices on everyday items and how this would impact disposable incomes.
“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.”
Visa’s UK Consumer Spending Index also showed that food and drink spending was unchanged year-on-year, while spending on household goods fell by 2.7 per cent compared with same time last year.
Growth in spending was led by leisure and hospitality sectors. Hotels, restaurants and bars experienced a 5.7 per cent year-on-year increase in spending, while recreation and culture recorded a 3.1 per cent annual spending increase.
The index is based on data from Visa card spending and the figures are adjusted to reflect overall spending, not just that on cards.