Retail sales disappoint as consumer spending falls in December

Visa’s consumer spending index found clothing and footwear sales dropped 6.2%

Face-to-face shopping fell 3.9 per cent in December. Photograph: Matt Kavanagh/The Irish Times

Face-to-face shopping fell 3.9 per cent in December. Photograph: Matt Kavanagh/The Irish Times

 

Irish consumer spending fell in December for the first time in almost two years reflecting weakness in retail, according to a survey by Visa.

The Irish consumer spending index, produced by IHS Markit, saw spending fall 0.3 per cent in December compared with the same month in 2017 having risen 1.1 per cent in November.

Particularly worrying for retailers though was the fact that face-to-face spending dropped 3.9 per cent after falling 4.3 per cent in November.

“The high street’s continued struggle contributed to the first decline in overall household spending since February 2017. While the dip in spending is marginal, it’s reflective of an overall slowdown in the rate of expansion throughout the last quarter of 2018,” said Visa Ireland country manager Philip Konopik.

Meanwhile, e-commerce spending rose almost 10 per cent, although the rate of expansion fell slightly.

Clothing and footwear sales caused the most significant drag on the index with spending dropping 6.2 per cent in the 12-month period, the sharpest decline since Visa began the survey in 2014.

With Christmas parties in full swing in December, hotels, restaurants and bars saw expenditure rise 10 per cent compared with November. In the 12-month period, household goods spending rose 5.2 per cent while recreation and culture led to consumers shelling out 1.3 per cent more than the previous year.

“The lack of growth momentum seen in November gave way to an outright decline in spending during December as Christmas failed to deliver,” said IHS Markit associate director Andrew Harker.

“The fall is only the second we’ve seen in over four years of the consumer spending index, while the other reduction in February 2017 was due to base effects following the leap year in 2016.”