Consumer spending in the UK grew by just 0.4% year-on-year in January. This was according to the latest UK Consumer Spending Index by Visa.
In comparison to growth seen in the past, the report said that January’s reading was not only lower than December’s 2.5% growth but that it also marked a five-month low.
Additionally, Visa also noted that this growth was the second-weakest rate of expansion seen in just over three years.
The Visa report as seen by IBTimes UK highlighted that this growth in January was led by increased spending in hotels, restaurants & bars. This sector, it said, saw an on-year increase of 5.7%.
This was followed by the recreation & culture sector, which saw an increase of 3.1%.
The other sector which saw an increase in spending was the miscellaneous goods and services sector, which recorded a marginal growth of 0.6%.
Meanwhile, the sectors which saw an on-year decline in spending were clothing & footwear, household goods, health & education and transport & communication, which were down 3.8%, 2.7%, 2.1% and 5% respectively.
Spending in the food & drink categories was unchanged.
The report also threw light on spending on e-commerce portals as against face-to-face spending. As seen in the past, the former continued to dominate the latter. While e-commerce spending rose by 4.1% year-on-year, face-to-face spending declined by 3.1% in January, marking the quickest pace of slowdown seen in four years.
That said, Visa noted that e-commerce growth was also not commendable as it was not only lower than the 5.3% growth seen in December but was also the slowest annual rate of growth seen in five months.
Commenting on the report, Kevin Jenkins, UK & Ireland MD at Visa said, “Following a bumper Christmas season, there were signs that consumers were starting to reign in their spending at the start of the New Year.
Annual growth slowed down from 2.5% in December to a five-month low of 0.4% 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.
“Face-to-face wasn’t all doom and gloom in January though, and winners on the high street did emerge. Brits continued the trend of spending on experiences rather than goods, with a near 6% spending boost in the hotels, restaurants & bars sector, and a 3.1% lift in recreation and culture spend.”
The UK Consumer Spending Index was compiled by data company IHS Markit on behalf of the American financial services firm Visa. It reflects the overall consumer spending in the country and not just that on Visa cards.