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UK consumers withhold spending

While some stores in the UK are prospering, others are finding this spring and summer a struggle. Recreation and culture spending has fallen for the first time in almost four years.

Consumers are clearly starting to feel nervous about the implications of Brexit, the rise in inflation and political uncertainty after last month’s general election. Spending at physical locations fell 2.4 per cent during June, the second drop in succession. While online spending continued to rise, the 2.9 per cent increase couldn’t make up for the physical store dip. And besides it was still well below the 6.8 per cent increase that had been seen during May.

One bright spot was spending on miscellaneous goods, which includes hairdressing salon visits and jewelry purchases. It rose 5.7 per cent. Consumers are diverting their discretionary cash to essentials. Spending on food and drink rose two per cent in June while the household goods figure dropped as shoppers cut back on expensive items like furniture and non-necessities like home ware. There has been a sharp drop-off of people investing in replacing their old sofas.

The marked deterioration in household expenditure trends since last year comes at a time when households are facing an increasingly challenging scenario of rising living costs and weaker wage growth.

 
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