LONDON (Reuters) – British consumers tightened their belts further last month, figures from payment card company Visa showed on Monday, adding to signs that the economy is struggling to recover from a weak first quarter.
Visa said inflation-adjusted spending on its credit and debit cards in April was 2 percent lower than last year – the same decline as in March and one of the steepest declines of the past five years.
Looking at the three months to April, the fall in spending gathered pace, dropping by 1.6 percent on a seasonally adjusted basis compared with the previous three months. In March, spending fell by 1.3 percent on a similar basis.
“Low confidence levels amongst shoppers and the gloomy outlook for the UK economy are likely to have contributed to this continued caution,” Visa’s chief commercial officer, Mark Antipof, said.
Discretionary spending on furniture, electrical appliances and recreation was worst hit, Visa said.
Last week the Bank of England said a first-quarter slowdown in economic growth to just 0.1 percent was probably a blip caused by unusually icy weather. But it did highlight weaker consumer spending and a softer housing market as possible warning signs of more persistent sluggishness.
Visa said the weak consumer spending was surprising given inflation was beginning to slow and wage growth was edging up.
“Retailers will be pinning their hopes on further improvements in household finances and warmer weather leading to a more upbeat few months heading into summer,” Antipof said.
Visa says its cards account for a third of British spending. The data is adjusted for changes in Visa’s market share, a long-term decline in cash usage, and to strip out transactions that do not count as consumer spending.
Reporting by David Milliken, editing by Andy Bruce