Consumer spending cooled in December, suggesting shoppers have started to tighten their purse strings amid concerns over the wider economic picture moving into 2017.
Fourth quarter spending was boosted by upticks of 5.5% in October and 5.1% November, but this figure fell to 4% in December, below the Q4 2016 average of 4.8%, according to Barclaycard.
December’s figure coincided with a drop in the proportion of consumers expressing confidence in the UK economy, which fell 12 percentage points from a record high of 48% at the end of Q3 to just 36% at the end of Q4 – a return to levels seen before the EU referendum in June.
The end of the year proved a hit for ecommerce retailers, with online spending up 15.1% in December. The high street suffered, however, with in-store spend growth flat lining at 0.3%, leading some retailers to issue profit warnings after the festive period.
Paul Lockstone, managing director at Barclaycard, said: “2016 saw consumer spending growth sign-off with a very strong quarter, but the headline number masks a story of softening spend growth as the year came to an end. While October and November were record months, spending growth slowed a little over the key festive shopping weeks in December.
“This could be an early indication of things to come as consumers seem to have entered 2017 with more caution, citing worries about inflation and the triggering of Article 50. Looking ahead, all eyes will be on whether this year will see households begin to feel squeezed by rising prices, leading to a sustained fall in consumer spending on discretionary items in favour of their day-to-day essentials.”