Shoppers kept their wallets in their pockets in January, with spending falling by 1.2%, according to the latest figures from Visa.
It was the first fall for the month – usually boosted by the January sales – in five years.
Spending has now fallen in eight out of the past nine months, with clothing, furniture and household goods bearing the brunt of consumers’ caution
Transport and communications sector was another victim of the spending squeeze, posting the sharpest decline of all spending categories.
However, it wasn’t all doom and gloom. Britons tackled the January blues with evenings out and early holiday bookings, while spending on jewellery, beauty products and visits to hair stylists recorded strong growth, too.
Annabel Fiddes, principal economist at IHS Markit, said the latest Visa consumer spending data signalled a disappointing start to the year.
“This suggests the weak expenditure trends in 2017 have carried through into 2018, as households continue to face rising living costs and lacklustre wage growth,” she said.
“Subdued spending trends coincide with a slowing of the overall UK economy during 2017, while the PMI surveys for January point to a further softening of growth momentum at the start of the year.”
Fiddes said lingering uncertainties over Brexit negotiations were also weighing on consumer confidence, which has stayed well below the levels seen before the referendum.
“However, labour market conditions remain tight, with employment at a record-high, which is expected to place greater upward pressure on earnings growth,” she added.
“Combined with forecasts of cooling inflationary pressures over the coming months, these factors could lead to a relative improvement in expenditure trends as the squeeze on pay-packets unwinds, although overall trends are likely to remain largely subdued in the current economic environment.”