Economy

United Kingdom consumer spending spikes up in September, but trend gloomy: Visa

United Kingdom consumer spending spikes up in September, but trend gloomy: Visa”

Consumer spending - adjusted for inflation and seasonal effects - rose by 1.4% in September after falling 0.4% month on month in August, Visa said, based on its credit and debit card data.

Face-to-Face expenditure has now declined on an annual basis throughout the past five months, with the rate of decline picking up slightly in September to -3.2%.

Household expenditure was up 3.1pc year-on-year last month, a faster rise than in August, and the sharpest overall rise since March.

"This month's Irish Consumer Spending Index paints a positive picture for the Irish retail sector, which enjoyed its best quarter this year".

"Rising living costs, muted wage growth, and ongoing uncertainties surrounding Brexit negotiations and the strength of the United Kingdom economy continue to act as drags on household spending", said Annabel Fiddes, an economist at financial data company IHS Markit, which compiled the data for Visa.

There was lower spending across Transport & Communication which fell by 6.4% and across Household Goods down 2.6%.

On the other hand, hotels, restaurants and bars had a "relatively subdued" increase in spend of 3.5%, and the food, drink and tobacco category gained 1%.

Spending on Recreation & Culture suffered its biggest decline since July 2013, however the rise in United Kingdom tourism sees increased spending at Hotels, Bars & Restaurants.

"eCommerce continued to drive the growth in spending, however face-to-cace spending also played its part, demonstrating its first increase in twelve months", Philip Konopik, country manager with Visa Ireland, said.

But there was good news for Britain's hospitality industry, which received a boost from increased numbers of tourists visiting the United Kingdom to take advantage of a weaker pound.

Household spending declined again in September, throwing cold water on hopes of a recovery after a slight uptick in August.

Lingering Brexit uncertainties alongside the strength of Britain's economy were said to be key factors weighing on the confidence of both consumers and businesses in the UK. "Notably, the latest PMI survey data suggest that United Kingdom private sector growth remained sluggish over Q3 and, combined with the CSI figures, suggest that the economy is now on course for a relatively subdued year of growth", added Fiddes.



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