Blaming the rain for weak consumer spending 'will not wash'

Figures from June's Visa UK Expenditure Index, demonstrate a slight rise in UK household spending of 0.3 per cent, in comparison to the previous month, but an underlying deterioration in household spending since the first quarter of the year.

Compared to last year's figures, household spending was estimated to have fallen by -3.8% in real terms.

Poor weather cannot be used as an excuse for people staying away from the High Street as figures for consumer spending both online (-5.5%) and by telephone (-8.0%) were also down.

The Index, which is published on a monthly basis, uses card spending data and adjusts it for a variety of factors to create a like-for-like comparison of consumer spending.

On a more positive note the hotel and restaurant sector reported a positive annual growth of +5.5% in June.

Dr Steve Perry, commercial director at Visa Europe said the rise in spending in the hotel and restaurant sector could perhaps be "as a result of efforts to encourage staycations".

Chris Williamson, chief economist at Markit, the financial information services company which compiles the data, attributed the rise in spending at hotels and restaurants to the "additional public holidays" as a result of the Queen's Jubilee.

While the Jubilee helped to support a temporary boost in spending in areas such as bars and restaurants, the Index reports that it was "largely at the cost" of reduced spending in other sectors, such as recreation and culture.

Williamson said:

"The data therefore paints a sombre picture of consumer spending still very much under pressure from high unemployment, economic uncertainty and falling pay after allowing for still-high inflation.

"Inflation needs to fall further and the labour market needs to show some real improvements before spending is likely to gain traction again."