Visa Europe’s new research shows that overall household expenditure declined by 0.7% and high-street spending by 0.6%.
Furthermore, clothing and footwear steeply dropped by 6.5%, which has been put down to a mild month which dampened sales, and heightened sales figures in August.
Hospitality, and restaurants and bars noted a solid increase in expenditure, with a rise of 7.4% in the latter category, with food and drink following suit with 1.8% growth.
However, figures released yesterday (Monday) show that the
UK services sector growth slowed slightly, with the purchasing managers’ index from Markit/CIPS falling from 60.5 to 58.7 in August.
It is expected that GDP will be down slightly in the three months to September to around 0.8%.
Last month, overall UK expenditure increased by 1.8%.
Online spending fell a fraction, by 0.1%, and face-to-face expenditure declined by around 0.6%, the first time in six months.
Visa Europe’s UK Expenditure Index takes data from card spending and adjusts it for a like-for-like comparison of consumer spending, compiling data of over 1.9 billion transactions every quarter, which amounts to around £1 in £3 of spending.
Kevin Jenkins, Managing Director UK & Ireland at
Visa Europesaid a reluctance to spend on clothing due to warmer weather resulted in a drop in high street sales.
“September did see a slight fall in consumer spending but the trend for Q3 as a whole suggests this is a likely to be a blip. Over the quarter, spending rose at 1.3% year on year signalling an ongoing period of steady growth.”
Paul Smith, Senior Economist at Markit said the drop in expenditure was just a “blip”.
“Although there was a mild drop in overall spending signalled during September, this was primarily a function of a slide in Clothing & Footwear sales as the driest September on record meant consumers had little appetite to purchase from retailers’ autumn/winter lines.
“Although growth may be constrained by still tepid wage growth, and there is a chance of an interest rate hike by the Bank of England early in 2015, we expect modest growth of consumer spending to continue to play a supportive role to the UK economic recovery over the coming months.”
Economist Neil Saunders, Managing Director of retail research agency Conlumino, said that while the weather was partly to blame for the poor figures, it was only “part of the story”.
“The reluctance to buy reflects a consumer that while more confident, is still cautious about making unnecessary expenditure. That’s why people are unwilling to part with cash even for investment pieces like winter coats; large numbers increasingly purchase out of necessity, and will happily postpone buying things until they need to."
Vince Cable addressed the Liberal Democrat party conference yesterday (Monday), and said that “nobody should be complacent” about the economic recovery.
“The economy is still dangerously dependent on the drug of cheap money,” he said. “Some of the stress factors which preceded the crisis – like serious housing inflation, a mountain of mortgage debt, and weak trade performance – are still with us.”