March suffered low spending growth in the UK
as the pent-up consumer demand left by the Arctic conditions of
December dissipated, according to the UK Expenditure Index.
The research, produced by Visa Europe and
financial information services company Markit, showed consumer
spending grew 4.4% in Q1 2011, when compared to the same point last
year.
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Furthermore, on a seasonally adjusted basis,
spending in Q1 2011 was 0.5% higher than in Q4 2010. Visa claims
this is the first time since Q2 2010 a quarterly expansion has been
recorded but it said to in part reflect the weather-affected
December spending.
The positive growth in the first quarter is
said to have been ‘particularly driven’ by the first two weeks of
the year. The high spending figures are attributed to consumers
releasing their pent-up retail demand following December’s snow and
those looking to escape the VAT increase.
Year-on-year spending growth was 8.5% in
January but this fell to 3.2% in February and 1.8% in March.
“The Visa Expenditure Index adds to a
growing body of evidence to suggest that the UK economy pulled
itself out of the relapse seen late last year,” said Chris
Williamson, chief economist at Markit.
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By GlobalData“Compared to a year earlier, growth of
consumer spending is estimated to have improved in the first
quarter. However, much of this increase was attributable to
January’s bounce-back in spending from the coldest December for a
century.
“Data for February and March, on the other
hand, suggest that a slower growth trend has again become apparent
as households fight the growing headwinds of falling real incomes,
which fell last year for the first time in thirty years,
deficit-reducing tax hikes and looming public sector spending
cuts.”
The value of average transactions fell on a
year-on-year basis from £50.03 ($81.9) in Q1 2010 to £49.25 in Q1
2011, but grew on a quarterly basis from Q4 2011.
The Index is based on spending on all Visa
debit, credit and prepaid cards which are used to make an average
of over 1.4bn transactions every quarter and account for £1 in £4
of all UK spending.
