Jessica Fino 11 Sep 2017 11:46am

Consumer spending on track for four year low

Consumer spending is set to be the weakest this year since 2013, despite growing in August for the first time in four months, a new survey has found

Visa’s consumer spending index found that household spending grew by 0.3% in August, the first increase since April this year.

However, Visa said that, with an average growth of 0.2% each month this year, consumer spending is on track for its weakest calendar year of growth in four years.

Kevin Jenkins, managing director at Visa, said, “Consumer spending in August has bucked the trend of the previous three months, registering a marginal increase against the same period last year.

“Nevertheless we are wary about taking this as a sign that the household squeeze is easing given the clear slowdown in spending during the preceding three months.”

The consumer spending growth registered in August was led by a 6.5% expansion in e-commerce spending, while face-to-face commerce fell by 2.6%.

Annabel Fiddes, principal economist at IHS Markit, said, “The latest figure may have been supported by a particularly weak performance this time last year, when expenditure was dampened in the aftermath of the Brexit vote.

“Weaker consumer spending trends highlight the difficulties facing the UK economy, with rising prices, lacklustre wage growth and a prolonged period of uncertainty over Brexit talks all likely to weigh on household consumption and economic growth for the rest of 2017. As a result, it seems unlikely that the Bank of England will look to raise interest rates for the foreseeable future.”