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'Stagnant' wages trigger spending slowdown

Consumer spending in the UK dropped for the third month in a row in July, marking the longest period of decline in four years.

Visa’s Consumer Spending Index, which tracks shopping habits using data from credit and debit cards as a base, showed the amount we spent dropped by 0.8% in July compared to last year.
That follows similar drops of 0.9% in May and 0.2% in June.
Transport and communication spending saw the biggest decline, down 6.1% year-on-year, partly helped along by a drop in flight bookings as more people choose to enjoy their summer holidays at home.
Clothing and footwear also took a significant 5.2% hit, while spending on household goods has continued its downward trend, declining by 4%.
The figures provide “further evidence that rising prices and stagnant wage growth are squeezing consumers’ pockets”, Kevin Jenkins, UK and Ireland managing director at Visa, said.
“The drop in spending was felt across a broader range of retail sectors last month, with clothing, household goods, food and transport among the worst hit.”

But the news wasn’t all bad, with some bright spots emerging in the hospitality sector.
Evenings out seem to be on the up as spending at hotels, restaurants and bars jumped by 6% year-on-year.
The amount people paid out for recreation and cultural activities also increased by 1.3%.
The figures seem to reflect the impact of the fall in the value of the pound following Brexit, which has pushed the cost of overseas holidays up and encouraged more people to stay in the UK for the summer.
“The sector is likely to have benefited from an early surge in summer staycations, as the weak pound made holidaying at home more attractive,” Mr Jenkins said.

Source: Sky

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