Consumer spending drop in March 'rounds off worst quarter in over five years'
Household spending deteriorated to its weakest level in over five years during the first three months of 2018 amid the cold weather and waning consumer confidence, according to an index.
Spending fell by 1.4% year-on-year across the first quarter of this year - marking the worst quarterly performance since the fourth quarter of 2012, Visa's UK Consumer Spending Index found.
Overall consumer spending fell by 2.1% annually in March, with face-to-face spending on the high street down by 3% year-on-year.
Online spending decreased by 1.2% annually - the first time in 10 months there has been a decline and the fastest rate since 2012.
Mark Antipof, chief commercial officer at Visa, said: "The negative impact that the Beast from the East had on UK economic activity last month has been widely reported, but this doesn't entirely explain March's lacklustre consumer spending.
"We are in the midst of a dip in consumer confidence and this - coupled with other economic factors - is causing shoppers to continue to restrain themselves.
"High street sales suffered once again, however it is also noteworthy that e-commerce spend fell for the first time in 10 months, and by its fastest rate since 2012.
"That said, it is too early to read a great deal into this year-on-year decline, which should be viewed in the context of high growth rates in early 2017."
Spending on transport and communication plunged by 8.6% annually in March, while spending on recreation and culture fell by 5.6%.
Spending on clothing and footwear fell by 2.7% - the quickest pace for five months.
Food and drink was the best-performing category in the index in March, likely boosted by the run-up to Easter, Visa said, with a 5.7% annual increase in spending.
Hotels, restaurants and bars were another bright spot, with a 4.2% annual increase in consumer expenditure in this category.
The index uses spending on Visa cards as a base and the figures are adjusted to reflect all consumer spending, not just that on cards.
Annabel Fiddes, principal economist at IHS Markit - which compiles the report, said: "Consumer spending continued to decline at the end of the first quarter, though the latest reduction in spend was likely exacerbated by the recent spate of extreme weather."
She continued: "While we could expect to see a relative improvement in the numbers next month as weather conditions normalise, the underlying trend remains relatively weak."
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