New data from Visa Europe shows that consumer spending in January rose by 1% on the previous month.
Chris Williamson, Chief Economist at Markit, said the rise is “adding further hope that a revival of the UK economy in the first quarter will prevent a triple-dip recession”.
He added: “However, spending remains below levels of a year ago, highlighting the ongoing pressure on household finances from the combination of high inflation and weak wage growth. As such, households look an unlikely source of renewed UK economic vigour.”
Despite of heavy snow in mid-January, household spending increased last month, the fifth time in the past eight months that a month-on-month rise in spending has been recorded.
Visa Europe’s UK Expenditure Index takes card spending data and adjusts it for a variety of factors to create a like-for-like comparison of consumer spending, making it a robust indicator of consumer spending habits.
Compared to January 2012, consumer spending was down -0.9%. On the three-month on three-month measure, spending fell at a rate of -1.3%, little changed on December’s -1.0%.
Dr Steve Perry, Commercial Director at Visa Europe said:
“This represents the largest rise in monthly spending since September’s post-Olympic boost.
“The heavy snowfalls clearly had a significant impact on high street spending with a 3% fall compared to January 2012.
“This continued a trend we have seen in the Expenditure Index over a number of months, with its results all too evident in the recent retailer administrations.
“The adverse weather has helped to continue the strong growth in online spending with a rise of almost 4% on the year.”
The latest channel data highlighted the impact of the snow showers in January as spending fell on the high street, but grew strongly online.
Spending by “face-to-face” was down by -3.0% on the year during January, the fourth month in succession that a net fall has been registered.
In contrast, there was a strong gain in spending online, with latest data showing a 3.9% increase on a year ago, the best growth recorded for 15 months.
Spending via Mail Order/Telephone Order (MOTO) also increased markedly, rising by 4.2% year-on-year.