Consumer spending falls in June – even online – as rain and Brexit dampen mood
Consumer spending has slowed at a pace not previously recorded in the past five years, according to a new analysis of spending in stores and online.
Visa’s Irish Consumer Spending Index, produced by IHS Markit, found on Wednesday that the total value of purchases – including use of cash, cheques and electronic transactions – declined in June by 2.6pc versus a year ago. That is the sharpest drop since IHS Markit began compiling these monthly reports in 2014.
“The latest CSI figures are a cause of concern, as both face-to-face and e-commerce registered declines in consumer spending,” said Philip Konopik, Ireland manager for Visa.
Retail Ireland, the IBEC body representing operators of 3,000 retail outlets across Ireland, said the comparatively weak June reflected two issues: sunshine and Brexit. While the sun blazed last summer, it was in short supply last month, and the current Conservative Party leadership tussle in the UK is depressing Irish sentiment, too.
“A 2.6pc decline does look significant. But when comparing recent spending with June 2018, we’ve got to be conscious of the terrific summer weather we had then. Prolonged hot weather drove footfall, so we’re coming off an artificial high. That accounts for the decline,” said Retail Ireland director Thomas Burke.
“There’s also a bit of softness in consumer sentiment at present that we can attribute, at least in part, to Brexit,” Mr Burke said. “The increase in public discussion of Brexit in the last couple of weeks has resonated strongly with consumers. It reins in spending when we see a spike in Brexit discussion.”
The monthly report also recorded its first quarterly decline in its five-year history. Spending in the April-June quarter fell 0.9pc versus the January-March period.
While IHS Markit’s monthly reports often show spending in shops struggling to record growth, this usually is offset by stronger spending online. But in June, online spending also recorded an 0.5pc drop from May – its first decline since October 2017.
Purchases didn’t fall in every sector, however. Spending versus May levels rose 5.1pc at hotels, restaurants and bars, 2.1pc for household goods, and 1.3pc for recreation and cultural activities.
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