Household spending dropped 0.9% in July due to “disappointing growth” in real earnings, according to Visas’ UK Consumer Spending Index.
The quickest fall in spend was registered in retail categories, decreasing by 1.2% year-on-year, and ecommerce expenditure fell by 0.5% after a marginal rise during June (0.4%).
According to the group the recent “interest rate hike” by the Bank of England is likely to add further pressure on households’ budgets, and anxieties around the ongoing Brexit negotiations could lead to lower consumer confidence.
Mark Antipof, CEO at Visa, said: “Retailers had a difficult time in early 2018, and while there was some respite in May and June, July’s fall in spending is concerning, particularly as we look ahead when the impact of the interest rate rise and back-to-school costs will likely put further pressure on Britons’ wallets.”
Annabel Fiddes, principal economist at IHS Markit, added: “The Visa UK CSI pointed to a renewed fall in household spending during July, as it seems the warm weather and World Cup failed to help lift spending for the third month in a row. However, the rate of reduction (-0.9% year-on-year) was not as strong than those seen earlier in the year.”