Shoppers put holidays and car purchases on hold last month in the weakest quarter for consumer spending since early 2014.
Spending on transport and communication, which includes flight bookings and cars, slid 4.2% year on year in June after a 5.5% decline in May. This contributed to a weak rise in consumer spending of 1.4% in the second quarter of 2016, according to data from credit card company Visa.
Sales growth at hotels, restaurants and bars rose by 3.3% in June, less than half the pace of the near-7% rise in May, as more cautious consumers chose to watch the Euro 2016 football tournament from the sofa instead of the pub.
Kevin Jenkins, UK and Ireland managing director at Visa, said: “With the [referendum] result coming late in the month, this report doesn’t give the full picture but there’s a clear trend over recent months showing a slowdown in overall growth. The index shows that discretionary spending has been the worst affected area.”
He said industry reports of new car sales falling in June provided further evidence that people are holding back on big-ticket purchases in the face of economic and political uncertainty around the EU vote.
Visa’s figures come after market researcher GfK recorded the biggest fall in consumer confidence for 21 years, in a one-off poll after the referendum on 23 June. Earlier this week, the group, which has been monitoring UK consumer confidence since the 1970s, said measures of confidence about the economic outlook, people’s personal finances and big purchases, had all fallen.
The accountants BDO also published a report last week suggesting there was an immediate drop-off in sales after the leave vote. It also revealed that last month marked the weakest June performance for the high street in more than a decade.
Marks & Spencer reported its biggest fall in clothing sales in more than a decade on Thursday as its new chief executive, Steve Rowe, said confidence had weakened in the run-up to the EU referendum. That same day, retailer Sports Direct said it had seen a drop-off in sales since the referendum and profits would come under pressure from the lower value of the pound.
Visa noted that growth among clothing and footwear sales slumped to just 0.1% year on year in June compared with a 4.3% rise in May.
