Consumer spending down, but hospitality sector stronger

Greater spending was seen in the hospitality (hotels, restaurants and bars) categories (+6.0 per cent) at the start of the third quarter, according to Visa’s UK Consumer Spending Index (CSI), while consumer spending falls by -0.8% on an annual basis, following declines in May and June.

Data from the UK CSI, which uses card transaction data to provide a robust indicator of total consumer expenditure across all payment methods, signalled a further decline in household expenditure at the start of the third quarter. Compared to the same month a year ago, spending fell -0.8 per cent in July, which was slightly faster than seen in June (-0.2 per cent). Moreover, spending has now declined in each of the past three months, to mark the longest period of deterioration since the five-month sequence ending in February 2013.

However, the hospitality industry registered the fastest increase in expenditure (+6.0 per cent), followed by miscellaneous goods and services. Recreation and culture also saw a modest rise in spending (+1.3 per cent) after a fall in June.

“The figure provides further evidence that rising prices and stagnant wage growth are squeezing consumers’ pockets,” said Kevin Jenkins, Visa’s managing director for the United Kingdom and Ireland.

Pointing to continued strength in spending on hotels, restaurants and bars, Mr Jenkins adds: “The sector is likely to have benefited from an early surge in summer staycations, as the weak pound made holidaying at home more attractive.”

Josh Beer of The Illustrious Pub Company, Cambridgeshire, says: “As expected, it’s been a quieter month for us, with sales down 3 per cent on last year. We’re changing our business to accommodate the shift in consumer spending habits and anticipated a slight dip. We’ve noticed that people are either willing to treat themselves to quality meals or looking for a bargain, so our marketing now emphasises our premium offering.”

At Beavis Morgan, we have extensive experience of working with clients in the hospitality sector and our professionals are acknowledged experts in issues affecting pubs, bars and restaurants.

Contact Matthew Burge or your usual Beavis Morgan Partner for further information about how we can assist you and your hospitality business.