Consumer spending dip as Brexit vote hits confidence
Consumer spending took a hit in August as the Brexit vote continued to hurt confidence, a new report shows.
Research by Markit and Visa showed that expenditure fell by 1.4% month-on-month, versus a 1.1% rise in consumer spending in July, and a 0.5% drop in June.
On an annual basis, consumer spending grew at its weakest pace in nearly three years, rising a meagre 0.1%. High street retailers suffered the biggest drop in spending, down 2.8% compared to the same period last year.
However, the report noted that online spending effectively offset that decline, rising 3.2% on an annual basis.
"The data has shown that since May consumer spending has established a slower overall growth trajectory in the run up to and after the Brexit vote in late-June. This coincides with weaker consumer confidence and heightened uncertainty towards the UK economic outlook," Markit said.
The UK Consumer Spending Index looks at Visa's debit, credit and pre-paid card transactions, which the report says account for £1 in every £3 spent in the UK.
The report showed that spending rose across four out of eight sectors in the year to August.
Clothing and footwear dropped 2.6%, while hotels, bars and restaurants saw a 4.3% jump in spending.
Expenditure in household goods rose 0.5%, but health and education spending dropped 1.4%.
Consumers spent 0.1% more on food, beverages and tobacco.
A 2% rise in recreation and culture spend was chalked up to the growing popularity of "staycations". Visa suggested this was in line with reports claiming that UK households opted to spend holidays in Britain rather than travelling overseas.
The amount spent on transport and communication subsequently dropped 4.6% over the 12 months to August.
Annabel Fiddes, an economist at IHS Markit said: "We will need more time and more data to see if anxiety around the Brexit vote and uncertainty over the UK's economic future leads to a continuation of muted expenditure growth, or an outright decline in spending."