UK consumer spending has fallen to its lowest level in almost four years as rising inflation and stagnant wages have dampened demand for non-essentials items.
According to Visa’s Consumer Spending Index released this morning, household expenditure fell by 0.3% from April to June year-on-year which represents the biggest drop in spending since the third quarter of 2013.
Face-to-face retail spending fell 2.4%, while growth in e-commerce sales slumped to 2.9% from 6.8% in the previous monthly update.
Spending on food and drink rose by 2% drive by inflationary price increases, but spending on non-essential items weakened as prices rise at a faster pace than wages.
Spending on household goods fell 3.4% in the period, spend on recreation and culture fell 1.2% and clothing and footwear spending was down 0.5%.
Kevin Jenkins, Visa’s UK and Ireland managing director, commented: “June data provides further evidence that an increase in the cost of living, coupled with slowing wage growth, are beginning to squeeze household disposable income.
“It’s clear that inflation is beginning to affect shopping habits, with consumers diverting their spending to essentials. Spend on food and drink grew by nearly 2%, while household goods suffered from a substantial drop as consumers cut back on big-ticket furniture and homewares.”
It is a quiet start to the week on the market this morning, with no market updates of note.A number of papers run with the news that Tesco chairman John Allan is set to be named the next vice president of the Confederation of British Industry this week - a role that would put him in pole position to assume the presidency next year.
On Friday the Grocer published its annual report into the fortunes of the biggest 50 fmcg companies in the world. Click here to read The OC&C/Grocer Global 50 report in full and here to read all the rest of The Grocer’s coverage of the report, including in-depth analysis of the tobacco sector, the M&A market, commodities and the top performers.
On the markets this morning, the FTSE has opened up 0.2% at 7,368.4pts.
This week in the City
Marks & Spencer’s (MKS) first quarter trading update tomorrow is the main item of note in the diary this week, with analysts predicting better fortunes in its clothing division after recent warm weather limit its sales decline to 1.3% in the quarter compared to a 5.9% drop in the final quarter of its previous financial year.
The M&S trading update will be followed by the retailers annual general meeting at Wembley Stadium.
Elsewhere, travel food retail specialist SSP Group (SSPG) will release its third quarter results on Wednesday.
In this US, PepsiCo (PEP) is scheduled to unveil its second quarter results on Tuesday.
Also, the BRC-KPMG Retail Sales monitor for June is out tomorrow morning.