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Consumer spending returns to positive territory in August

Press Release   •   Sep 17, 2018 09:10 BST

Visa’s UK Consumer Spending Index, compiled by IHS Markit, signalled a +0.4% year-on-year increase in household spending during August. Though only slight, the rise contrasted with a -0.9% reduction in July.

Consumer spending has now increased in three of the past four months, though the latest upturn was softer than those seen in May (+0.9%) and June (+0.7%), and continued to signal relatively subdued expenditure trends in 2018 so far.

On a channel basis, expenditure increased +0.3% year-on-year across Face-to-Face categories, after a -1.2% fall in July. At the same time, spending across eCommerce channels fell slightly (-0.2%), albeit at a slightly weaker rate than that recorded in July (-0.5%).

Mark Antipof, Chief Commercial Officer at Visa, commented:

"In a welcome contrast to the prior month, August’s consumer spending was buoyed by face-to-face purchases with back-to-school spending amongst parents likely contributing to a glimmer of hope for our high streets. The prolonged good weather has seen sustained performance for hotels, restaurants and bars and food anddrink again topping the sector categories.

“Despite the increasing pressure on household budgets, bricks and mortar retailers will take encouragement that face-to-face spending rose at a faster rate than e-commerce. Since Visa’s Consumer Spending Index first launched, one of the overarching trends has been the dominance of e-commerce over face-to-face spending. This is certainly an area to watch as we move towards to big shopping events such as Halloween and Christmas.”

Annabel Fiddes, Principal Economist at IHS Markit, said:

“The latest Visa UK CSI data signalled a renewed increase in consumer spending on an annual basis in August. That said, the rate of growth was only slight and underscored the fragility of expenditure trends since early 2017.

“As the positive effects of the summer heatwave and summer sporting events have faded away, it seems unlikely that spending trends will improve much given the challenging conditions households face. Notably, wages are struggling to rise as quickly as living costs, while the recent rate hike by the Bank of England likely adds strain on households budgets. At the same time, consumer confidence remains stuck near its post-Brexit vote low, as concerns continue to mount over what kind of Brexit deal the UK can achieve when leaving the EU.”

Visa Inc. (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network - enabling individuals, businesses and economies to thrive.

Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second.

The company’s relentless focus on innovation is a catalyst for the rapid growth of connected commerce on any device. As the world moves from analogue to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce.

For more information, visit (www.visaeurope.com), the Visa Vision blog (vision.visaeurope.com), and @VisaInEurope

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2018 IHS Markit Ltd. All rights reserved.

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