UK Consumer Spending in December Presents Mixed Trends

Two separate surveys conducted by Visa and MasterCard, facilitators of electronic fund transfers, have given mutually opposing views on consumer spending in the UK.

Visa Europe's expenditure index has found that consumer spending was "disappointingly weak" in December, declining 1.7 percent year -over- year and by 0.9 percent from the previous month, as sales on the High Street remained weak.

The household goods spending plummeted by 9.2 percent from the year-ago period, and spending on food and drink was down 2.2 percent.

High Street spending was down 2 percent year- over- year despite the late Christmas rush, with online sales declining 0.4 percent.

Over the final three months of 2012, total spending fell by 0.9 percent, according to the index, which tracks spending on Visa cards and then adjusts the figures to reflect wider consumer spending.

The weak spending figures indicate that the economy has contracted in the final quarter of 2012, adding to the fears of a possible triple-dip-recession.

"With a decline in total consumer spending of 0.9 per cent recorded in the final quarter, the latest data are therefore suggestive of a decline in household spending, and for that matter gross domestic product (GDP)," said Steve Perry, commercial director at Visa Europe.

" With consumers playing an important role in fuelling the 0.9 percent GDP increase in the third quarter, the drop in fourth quarter spending raises the likelihood that the economy may have contracted again," said Chris Williamson, chief economist at Markit, which compiled the index for Visa.

A separate survey from MasterCard has indicated that retail sales rose in December. Excluding petrol, retail sales increased by 3.9 percent in December, compared to the year-ago month.

The credit and debit card issuer attributed the increase primarily to the late Christmas shopping by consumers that more than offset a slow start in December.

"Households left their Christmas shopping until the last minute and gave a late boost to retail sales on the High Street and online," said Shweta Chaudhury at MasterCard Spending Plus.

The monthly retail sales monitor from the British Retail Consortium (BRC) due out tomorrow will provide a clear picture on consumer spending.

New BRC director-general Helen Dickinson previously warned retailers of a no-growth situation in 2013.