UK consumer spending falls for third month in a row in July

Visa's Consumer Spending Index for the month of July showed a fall in consumer spending for a third consecutive month, the longest such streak since February 2013.

Consumer spending saw an overall annual drop of -0.8% following declines in May and June.

E-commerce transactions increased 3.6% year on year, better than the 2.9% through the same period last year, but expenditures at traditional brick and mortar retailers went down -3.7% on 2016's figures.

The figures were seemingly in line with spending patterns as a whole. Josh Beer, of the Illustrious Pub Company in Cambridgeshire said, "As expected, it’s been a quieter month for us, with sales down 3% on last year. We’re changing our business to accommodate the shift in consumer spending habits and anticipated a slight dip."

The heaviest hit markets were transport and communication, which registered a -6.1% slide in spend, and clothing and footwear which dipped -5.2%.

Annabel Fiddes, Principal Economist at IHS Markit, who conducted the study on behalf of Visa, said: "The Visa UK CSI figures show that consumer spending trends continued to deteriorate in July. Total expenditure fell -0.8% on the year, after similarly marginal reductions in May (-0.9%) and June (-0.2%), to mark the longest period of decline since early-2013."

"Reduced spending comes at a time when the UK economy has been expanding at a relatively modest pace, while households have been facing strong increases in living costs, and a slowdown in earnings growth. Notably, the latest ONS figures show total real pay falling at the quickest pace for nearly three years.

“Alongside the renewed squeeze on household budgets, uncertainties linger over the direction of the economy and the outcome of the ongoing Brexit negotiations, which is weighing down consumer confidence. All this makes it seem unlikely that consumer spending will recover in the current challenging conditions, and adds to expectations that the Bank of England will not hike rates anytime soon.”