Wet weather kept consumers off the high street at the start of the year but didn’t stop them from spending in hotels, restaurants and bars, new figures have shown.
According to Visa Europe’s UK Consumer Spending Index, out today, consumer spending for the first quarter of 2016 rose by 2.3% compared to the same period the previous year.
The growth in spending was led by a boost in online spending, which was up by 4.2%, while the high street suffered, with face-to-face spending down by 0.9%.
The big winners were the recreation and culture sectors which saw a 5.6% hike, and spending in hotels, restaurants and bars, which rose by 5.3%.
Spending also rose in food and drink (2.5%) and household goods (1.9%) according to the figures, which were compiled by financial information company Markit.
But spending on clothing and footwear took a downturn, dropping by 1.8%.
Kevin Jenkins, UK & Ireland managing director at Visa Europe, said: “March saw a solid increase in consumer spending, with the leisure and hospitality sectors big winners, perhaps influenced by Mother’s Day and the Easter holiday falling in the same month.
“Britons made the most of their free time to enjoy family fun, days out and trips away.
"Bad weather looks to have hit demand for spring and summer clothing and kept consumers off the high street. Face-to-face spend dropped nearly 1% as a result, but e-commerce continues to grow strongly with over 4% growth.”
He said retailers would be keenly waiting for an upturn in the weather, while waiting to see the impact of the Living Wage – which was introduced on April 1 and guarantees pay of £7.20 a week to all workers over the age of 25 – on consumer spending.
Visa said its Consumer Spending Index reflects overall consumer spending, not just that on cards.
Annabel Fiddes, economist at Markit, said the latest index had rounded off a strong quarter for UK households, with March’s 2.3% expenditure slightly up from 2.2% in February.
This meant that the average annual rate of growth in the first quarter of 2016 (2.4%) was the strongest seen since the second quarter of 2015 (+2.5%), pointing to a “strong and sustained” recovery in consumer spending, she said.
“The relatively cold weather in March, including the storm seen over the Easter bank holiday weekend, may well have impacted spending on the high street (-0.9% on the year) and at clothing and footwear retailers (-1.8% ), but spending on days out and in food and drink categories continued to show robust growth.
“Looking ahead, it appears that a slight softening in consumer confidence alongside an uncertain economic outlook may pose a downside risk to expenditure growth in the next few months.”