LONDON • UK consumers cut back on spending for a third month in July as house-price growth slowed sharply, dealing yet another blow to the economy.
The broad-based weakness is being blamed on a squeeze on pockets as inflation outpaces wage growth as well as concerns about the health of the economy.
The latest figures leave both household expenditure and the property market at their weakest in more than four years.
A report from IHS Markit and Visa showed that consumer spending dropped0.8%year-on-year, with clothing, household goods, food and transport among the worst hit. Homeprice increases weakened to an annual 2.1% in the past three months, its slowest since April 2013.
“Alongside the renewed squeeze on household budgets, uncertainties linger over the direction of the economy,” said Annabel Fiddes, an economist at IHS Markit. “This makes it seem unlikely that consumer spending will recover in the current challenging conditions.”
The July consumer figures showed a 6% increase in spending at hotels, restaurants and bars. Markit said this may be partly related to an increase in “staycations”, with the weaker pound making foreign holidays more expensive.
According to a Halifax report, house prices slipped 0.2% in the three months through July against the previous quarter. That’s a fourth consecutive decline, the first time that’s happened since 2012. — Bloomberg