Consumer spending at lowest since July in run-up to Brexit

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High street

UK consumer spending has fallen to the lowest levels since July after it declined for a second consecutive month in November.

According to Visa’s UK Consumer Spending Index, consumer spending declined by 0.7 per cent, following a 0.2 per cent fall in October.

The decline also means that spending has fallen in seven out of the 11 months of 2018 so far, as expenditure struggles to maintain growth momentum.

Although online shopping slowed, it still outperformed bricks-and-mortar sales.

The latest decline took place as a result of a further fall in bricks-and-mortar sales, with a decline of 0.9 per cent in November, following a 0.2 per cent reduction in October.

Amid the decline, growth in ecommerce sales slowed down from 2.6 per cent year-on-year in October to just 0.4 per cent year-on-year in November.

“Despite the lure of Black Friday, consumer spending slipped again in November (0.7 per cent year-on-year), as it has in seven of the past 11 months,” Visa European principal economist Adolfo Laurenti said.

“Face-to-face retail spending fell, while ecommerce spending showed a slight uplift (0.4 per cent year-on-year) which still disappoints at the onset of this crucial festive season.

“Despite some easing in inflationary pressures and an improvement in wages and earnings, consumer confidence has deteriorated further, as uncertainty continues to surround Brexit.

“Economic conditions are likely to remain challenging for retailers, at least in the short term.”

IHS Markit principal economist Annabel Fiddes said: “The disappointing trend reflects relatively subdued consumer confidence as uncertainty lingers over the outcome of ongoing Brexit negotiations.

“At the same time, businesses signalled the weakest increase in activity for nearly two and a half years in November, according to PMI survey data.

“Although latest ONS data show pay growth rebounding strongly in recent months, softer rises in living costs and improved confidence regarding the outlook will likely be needed in order for this to translate into improved expenditure trends.”

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