Average UK household spend has dropped at its fastest rate in four years, as inflation and a “quadruple whammy” of bad news hit the economy.
According to the latest data from Visa‘s consumer spending index, spending fell by 0.3 per cent between April and June year-on-year, marking the steepest decline since 2013.
Non-essential items were worst hit as consumers who are feeling their pockets develop an increasingly lighter focus on necessities.
Clothing and footwear saw spending drop 0.5 per cent in June, while household goods had 3.4 per cent decline.
“June data provides further evidence that an increase in the cost of living, coupled with slowing wage growth, are beginning to squeeze household disposable income,” Visa UK managing director Kevin Jenkins said.
“It‘s clear that inflation is beginning to affect shopping habits, with consumers diverting their spending to essentials.
“Spend on food and drink grew by nearly two per cent, while household goods suffered from a substantial drop as consumers cut back on big-ticket furniture and homewares.”
The news comes ahead of an expected announcement on Wednesday that wages saw their slowest growth since the start of 2016, widening the current 2.9 per cent gap between pay growth and inflation.
Last week’s figures from the Office for National Statistics revealed that manufacturing output, production output and construction all dropped in May, sending the already-battered sterling tumbling further.
London Capital Group‘s head of research Jasper Lawler said: “Sterling was hit by a quadruple-whammy of bad news for British economy.
“UK industrial production slowing for a fourth month, a surprise contraction in construction output in May, house prices dropping 1% in June according to Halifax and the trade deficit widened.
“Maybe some mitigating factors like the warm weather effect on utility output affected industrial production but it’s hard to ignore multiple signs of slowing momentum in the UK economy.”