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Online purchases rise in April, despite subdued overall consumer spending: figures

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Early figures detected a fall in overall UK consumer spending in April – but a rise in online spending.

Visa Europe’s UK Expenditure Index, based on spending on Visa debit, credit and prepaid cards which account for £1 in £3 of all UK spending, found a 2.5% fall in consumer spending in April, compared to the previous month. That contrasts with three previous months of growth, culminating in 1.2% growth in March. Consumer spending was up by 0.5% compared with the previous year.

However, online spending showed a “solid” increase in April, growing by 6.2% on last year. That, found the researchers, was the sharpest increase since September 2011. Mail order and telephone spending grew by 8.8% in the month but face-to-face spending fell by 1.9%.

Annual growth was lowest in the food, beverages and tobacco category, at -6.2%, in health and education (-2.4%) and clothing and footwear (-2.1%). It was highest in miscellaneous goods and services (+20.1%), hotels and restaurants (+4.5%) and transport and communication (+3.1%).

Dr Steve Perry, commercial director at Visa Europe, said: “The overall picture of consumer spending is one of slow growth as evidenced by the +0.5% increase in April compared to the same month in 2012 and the underlying three-month growth rate of +1.1%. However, there is clearly continuing volatility from month to month with a marked decrease of -2.5% from March.

“The shift to online spending continues with strong growth of +6.2% on the year, the sharpest increase since September 2011, while face-to-face retail spending was down -1.9%,with the food and beverages and clothing and footwear sectors particularly affected.”

Chris Williamson, chief economist at Markit said: “A poor start to the second quarter raises fears that falling consumer spending could bring an end to the upturn in economic growth seen in the first quarter. Incomes are being increasingly squeezed once again by weak pay growth and rising inflation. However, it remains too early to say if this marks the start of a renewed downturn, and it’s reassuring to see that the underlying trend in spending remains much firmer than we saw late last year, especially as much of the weakness in April was confined to the food and beverages category.”

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