The rise in hotels and restaurants is more than offset by falls elsewhere, says Visa
Spending in the shops fell in July according to Visa, in another blow for Britain’s struggling high streets.
The credit card company, which accounts for £1 in every £3 spent in the UK, said that despite hopes that the heatwave could lift retailers, spending was down 0.9% in July compared with the same month a year ago.
The steepest fall was in “face to face” spending in retail outlets, which fell by 1.2%, but even spending online dropped 0.5%.
The figures are likely to reignite concern about the financial health of British households, where wage growth is running at only a fraction above inflation. Last month, ONS data revealed debt levels were worse than at any time on record, with households spending about £900 more than they received in income during 2017.
The gap between inflation and earnings could narrow completely when inflation figures are published on Wednesday. These are expected to show consumer price inflation ticking up from 2.4% to 2.5%, matching the current 2.5% growth in wages and effectively meaning real incomes are flatlining.
Visa said that while warmer weather boosted spending on food, drink, restaurants, and hotels, it was more than offset by a marked fall in spending on transport and household goods.
Mark Antipof, the chief commercial officer at Visa, said: “Retailers had a difficult time in early 2018, and while there was some respite in May and June, July’s fall in spending is concerning, particularly as we look ahead when the impact of the interest rate rise and back-to-school costs will likely put further pressure on Britons’ wallets.”
The figures may suggest that the relatively robust GDP growth of 0.4% in the second quarter of 2018 could be short-lived.
Visa said its spending index correctly pointed to the slowdown in UK economic growth in the first part of 2018 when GDP growth slipped back to 0.2%.
“The July figures pointed to a disappointing start to the third quarter,” the company said. “On an annual basis, total expenditure fell 0.9% in July, thereby ending a two-month sequence of expansion.”
Separate figures from LSL Property Services and Acadata reveal that house prices recorded their fifth successive month of declines in July.
It said average prices fell 0.2% during the month to £302,251, taking the annual rate of house price growth to 1.6%. Prices fell across all parts of London and the south, as well as the east of England. It added that transactions were 6% below the seasonal trend.
The figures are in contrast to Halifax, which recorded a surprise rise in prices in July. LSL said its index included cash purchases of property as well as the mortgage data recorded by the major lenders.
A survey released by Nottingham Building Society found that the recent raft of bank branch closures is hastening the loss of local shops on the high street.
It found that 46% of shop owners blame the loss of a local bank branch in the last three years for negatively impacting their business, while 24% said it contributed to them going out of business within the last five years.
Small business owners are suffering as a result of lower footfall, with 36% of consumers saying they would make fewer visits to their town or village once their local bank branch closed.
About 40% said they would make at least three fewer visits a month as a result. Shop owners in areas affected by branch closures estimate that their annual revenue dropped by an average of 20% after the bank shut its doors.