UK Consumer Spending Index August 2019: Continued steady fall in consumer spending

Visa’s UK Consumer Spending Index, compiled by IHS Markit, pointed to an ongoing decline in household expenditure during August, with the pace of reduction broadly in line with those seen in recent months. Spending was down -1.3% year-on-year, following a -1.2% decrease in July. 

Expenditure has now fallen on an annual basis in each of the past 11 months. Expenditure did expand on a monthly basis (+0.8%), but was down slightly again when looking at the quarterly change in spend (-0.3%). 

After returning to growth in the previous month, eCommerce spending saw a renewed contraction in expenditure in August (-0.5% year-on-year). That said, the decline in online spending was softer than that seen in Face-to-Face transactions. High street expenditure was down for the fourth month running, albeit to the least extent in this sequence (-1.2%).

Adolfo Laurenti, European Principal Economist, Visa, commented:

“The latest reading of the Visa Consumer Spending Index suggests that retailers continue to face a challenging environment, as spending slipped in August across most categories. Declines were broad-based, effecting both face-to-face and online transactions. Unseasonal weather resulted in a particularly disappointing month for the Clothing & Footwear sector with expenditure down more than 6% compared with August 2018, meanwhile Hotels, Restaurants and Bars stand out as the sector that bucked the downward trend with spending up +3.9% year-on-year in August. Consumer behaviour remains very defensive, despite robust fundamentals in the labour market and wage growth.”

Andrew Harker, Associate Director at IHS Markit, said:

“Continued restraint by UK consumers was evident in the latest Visa Consumer Spending Index (CSI), with year-on-year spending decreasing for the eleventh successive month. The subdued expenditure trend in August coincided with a drop in consumer confidence amid ongoing uncertainty around the final outcome to Brexit.

“The high street continued to suffer to a greater extent than eCommerce, albeit to a reduced degree in August as the rate of decline in Face-to-Face spending softened while online expenditure dipped back into contraction. Most of the sectors covered saw falls in spending, but Clothing & Footwear in particular remained in difficulty as expenditure declined sharply and at the fastest pace in almost two years.” 

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