Visa Consumer spending index falls for first time in almost two years
Consumer spending here fell during December, according to Visa.
Visa’s Irish Consumer Spending Index, produced by IHS Markit, shows that spending was down 0.3% year-on-year, following a 1.1% rise in November. It is only the second fall in the history of the series which began in September 2014.
The fall in overall spending (across all payment types - cash, cheques and electronic payments), reflected further signs of weakness on the high street. Face-to-Face expenditure was down 3.9% year-on-year in December, the second successive solid decline in spending following a 4.3% drop in November.
However, online spending continued to rise sharply, up 9.8% on the year.
Spending in the Clothing & Footwear sector decreased by 6.2% year-on-year. the sharpest decline since September 2014 and the sixth in as many months.
Falling expenditure was also registered in the Health & Education (-1.8%) and Transport & Communication (-0.3%) categories, with the latter recording an annual reduction in spending for the first time in nine months.
Growth was sustained in the Food & Drink (+0.7%), Household Goods (+5.2%) and Recreation & Culture (+1.3%) categories, but rates of expansion slowed at the end of the year. The only sector to see a faster rise in spending in December compared to November was Hotels, Restaurants & Bars, where expenditure was up +10% year-on-year.
Quarterly consumer spending data from the Central Statistics Office for the third quarter of 2018 signalled a slowdown in the rate of growth in line with that signalled by Visa’s CSI. CSI data for Q4 2018 pointed to a further slowdown in the rate of expansion at the end of the year, with expenditure up +1.4% year-on-year.
Philip Konopik, Ireland Country Manager, Visa said: “Despite e-commerce reporting another sharp rise in December, this wasn’t enough to boost Irish consumer spending compared with December 2017. The High Street’s continued struggle contributed to the first decline in overall household spending since February 2017. While the dip in spending is marginal, it’s reflective of an overall slowdown in the rate of expansion throughout the last quarter of 2018.
“Particularly noteworthy is the sharp reduction reported in Clothing & Footwear spending (-6.2% year-on-year), in comparison Hotels, Restaurants & Bars saw a +10% year-on-year spending increase suggesting consumers made a conscious choice to celebrate the festive period.”
Andrew Harker, Associate Director at IHS Markit said: “The lack of growth momentum seen in November gave way to an outright decline in spending during December as Christmas failed to deliver. The fall is only the second we’ve seen in over four years of the CSI, while the other reduction in February 2017 was due to base effects following the leap year in 2016.
“The high street continued to fare badly, and acted to drag down overall spending despite further strong online growth. Of particular concern was the sharpest reduction in Clothing & Footwear spending in over four years.“
