Although Visa's Irish Consumer Spending Index (CSI) continued to signal increases in expenditure in October, the annual rate of expansion slowed to the weakest in almost a year-and-a-half. Expenditure across all payment types (cash, cheques and electronic payments) rose +4.3% year-on-year, down from +5.0% in September and the weakest increase since May 2015. The latest expansion was also slower than the average seen across the 26 months of the series so far.
The latest slowdown in the rate of expansion continued a recent trend which has seen much weaker increases in expenditure than in the first half of 2016. Growth in overall spending was hampered by a reduction in expenditure in face-to-face categories.
Face-to-face spending was down -0.4% year-on-year, the first decline recorded in the series so far. This followed a marginal increase in the previous month. In contrast, eCommerce spending rose at a considerable pace (+15.0% year-on-year). Moreover, the rate of expansion quickened to a four-month high, with the sterling exchange rate making UK online retailers a more attractive option. Recent Red C research findings have shown that 29% of consumers are already claiming to be shopping online more from the UK since the changes in exchange rates between sterling and the euro1.
Wide divergences were also registered among the broad sectors monitored. Recreation & Culture remained the star performer, seeing spending rise +15.1% year-on-year. Meanwhile, Transport & Communication was the only other sector to see growth accelerate, with expenditure up +9.6% year-on-year. Solid, but slower increases in spending were also seen in the Hotels, Restaurants & Bars, Household Goods and Food & Drink categories.
Spending in the Clothing & Footwear sector continued to fall in the year to October. The latest reduction (-2.8% year-on-year) was the third in as many months and the sharpest in two years.
Philip Konopik, Country Manager, Ireland, Visa said:
“While it is very positive to have recorded the twenty sixth month of consecutive consumer spending growth, there were a couple of negative milestones in October. The fact that face-to-face spending recorded the first decline since the Visa Consumer Spending Index began is worrying for the Irish retail community, in particular for Clothing & Footwear experiencing a third month of contraction in a row. However, one of the busiest trading periods lies ahead, with Black Friday and Christmas offering a potential for bounceback.”
Andrew Harker, Senior Economist at IHS Markit said:
“The latest Visa Consumer Spending Index for Ireland showed growth easing to a 17-month low in October, chiming with other timely economic indicators which suggest that the expansion in the Irish economy has moved down a gear in recent months. On a positive note, growth in ecommerce continued apace and sectors such as Recreation & Culture and Transport & Communication performed well. There was bad news for the high street, however, as face-to-face spending actually declined year-on-year for the first time in more than two years. With a recent poll suggesting around one-third of Irish consumers are planning to shop in Northern Ireland at some point before Christmas to take advantage of sterling weakness, it appears that there are challenging months ahead for Irish retailers.”
Notes to Editor
About Visa Inc.
Visa Inc. (NYSE:V) is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world's most advanced processing networks — VisaNet — that is capable of handling more than 65,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead with prepaid or pay later with credit products. For more information, visit our website (www.visaeurope.com), the Visa Vision blog (www.vision.visaeurope.com), and @VisaEuropeNews