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6th November 2012Following two consecutive months of growth, UK household spending fell in October.
According to Visa Europe's UK Expenditure Index, October witnessed a fall in spending of 2.9 per cent compared to September.
Although there was a rise in internet spending, levels of spending on the high street were down on the levels a year ago.
The Index, which is published on a monthly basis, uses card spending data and adjusts it for a variety of factors to create a like-for-like comparison of consumer spending.
Despite the fall, an underlying growth of spending has been maintained, with average spending levels for the last three months still showing growth.
Dr Steve Perry, Commercial Director at Visa Europe said the fall in spending could possibly be down to consumers showing restraint ahead of the "traditionally expensive Christmas period".
"October’s figures will take some of the gloss off recent optimism as they are a timely reminder that household finances remain under pressure and consumers are exercising caution", he said.
Perry said that there is a possibility that Christmas spending is "underway online", as internet spending is up by 2.4 per cent compared to the same month last year.
Chris Williamson, Chief Economist at Markit, the financial information services company which compiles the data, said the reported downturn in spending corresponds with other survey data, which also "showed a marked deterioration in households’ views on their financial outlook in October".
"Spending is being cut due to worries about higher utility bills, a further rise in inflation, weak pay growth and ongoing job insecurity, the latter linked to worries about the wider economy", he said.
With consumers accounting for two-thirds of all expenditure in the economy, Williamson warned of the negative affect this will have on growth figures in the final quarter.
"Growth of GDP will clearly be far weaker than the 1.0% expansion seen in the third quarter, and the concern is that unless spending picks up as we move towards Christmas, there is a real risk that the UK could move back into recession", he said.