Household spending saw the weakest increase in more than two years in May as uncertainty over the EU referendum and a slowing global economy knocked consumer confidence, according to Visa UK’s Consumer Spending Index.
Spending increased by just 0.8% annually in May, slowing down sharply from a 2.6% annual increase in April and marking the slowest rate since February 2014
The strongest spending growth in May was experienced by hotels, restaurants and bars, which saw a 6.7% annual increase.
Kevin Jenkins, UK and Ireland managing director of Visa Europe, said: “Following a strong run in the first four months of the year, it seems that consumer spending growth has finally caught up with the uncertainty around the UK economy.
“Shoppers have clearly reined back their spending overall, and in particular, on big ticket items. Of the big drop in spending across the transportation and communications sector, slower growth in car sales appears to be a significant driver.”
The report found that spending on the transport and communication sectors fell by 5.2% annually in May, while spending on health and education decreased by 2% annually.
Spending on recreation and culture increased by 4% annually - marking the weakest growth seen for this sector in over two and-a-half years.
Spending on food, beverages and tobacco increased by 1.7% annually, while spending on clothing and footwear saw an annual increase of 4.2%.
The index, compiled by Markit, reflects overall consumer spending, not just that on cards.
Annabel Fiddes, an economist at Markit, said: “The latest data add to evidence that growing uncertainty around the economic outlook has contributed to a more cautious spending environment, and suggests that growth could remain muted until uncertainty fades and conditions both at home and abroad show signs of improvement.”