UK consumer spending sees rare drop

Dhaka,  Wed,  23 August 2017
Published : 12 Jun 2017, 11:24:50

UK consumer spending falls for first time in nearly 4 years: Visa

British consumers cut their spending for the first time in nearly four years last month, figures from credit card firm Visa showed, as households turned more cautious even before last week's shock election result.

Consumer spending in May was 0.8 per cent lower than in the same month in 2016 after adjusting for inflation, the first year-on-year fall since September 2013, Visa said on Monday.

Sales fell by a hefty 1.9 per cent in monthly terms.

"Our index clearly shows that with rising prices and stalling wage growth, more of us are starting to feel the squeeze," Visa managing director Kevin Jenkins said.

Britain's economy has shown signs that it is stagnating and confidence among businesses and consumers it expected to take a further hit after Prime Minister Theresa May failed to win a parliamentary majority in last week's election.

She now plans to lead a minority government with support from Northern Ireland's main unionist party, raising questions about how Britain will progress in Brexit talks and whether another election might be called soon.

After shrugging off the initial impact of last year's vote to leave the European Union, the effects of sterling's more than 10 per cent fall is catching up with Britons in the form of higher inflation, which is its strongest since September 2013.

Sterling weakened again after last week's inconclusive election result and businesses have said the election result risks paralyzing the government at a time when it is meant to be negotiating a smooth exit from the European Union.

Retail sales in the first three months of 2017 suffered their biggest fall since 2010. Data published on Friday showed industrial output and construction faltered again in April.

Britain's overall economy was the weakest performer among the Group of Seven rich nations in the first quarter of 2017.

Visa said bricks-and-mortar retailers suffered their biggest fall in sales in five years, which was only partly offset by strong growth in online sales. Growth in spending at hotels and restaurants - which has risen much faster than at retailers in recent quarters - slowed to an annual 3.3 per cent.

Spending on transport and clothing were the categories with the biggest falls.
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