Consumer spending in Britain fell for the first time in nearly four years in May, according to research by credit and debit card company Visa.
Household expenditure fell by 0.8 per cent – the first decrease since September 2013.
Spending by British households had been increasing only marginally in the first four months of 2017 and May’s figure was down from a 0.3 per cent increase in April.
The decline coincides with an increase in inflation, which reached 2.7 per cent in April overshooting the Bank of England’s 2 per cent target.
This has led to concerns about a squeeze on household budgets as wages struggle to keep up with rising prices.
Consumer spending accounts for more than two-thirds of U.K. gross domestic product.
Kevin Jenkins, UK & Ireland managing director at Visa, said: “Our index clearly shows that with rising prices and stalling wage growth, more of us are starting to feel the squeeze.
“Retailers of non-essential goods were among the worst hit, with clothing and household goods seeing sharp declines in sales."
Food and clothing sectors, which are heavily reliant on exports, are most exposed to the pound’s heavy drop against the dollar since Britain’s vote to leave the European Union.
Mr Jenkins added: “Bricks-and-mortar retailers had a particularly challenging month, with sales dropping at the quickest level in over five years, at a time when warmer weather and the May bank holidays would usually drive shoppers on to the high street.”
The figures showed online retailers fared well as their high street competitors struggled, with online businesses seeing spending increase by 6.9 per cent.
damian.fantato@ft.com
