Visa's UK CSI data signalled a further decline in household expenditure at the start of the third quarter. Compared to the same month a year ago, spending fell -0.8% in July which was slightly faster than seen in June (-0.2%). Moreover, spending has now declined in each of the past three months to mark the longest period of deterioration since the five- month sequence ending in February 2013.

“Consumer spend fell for the third month in a row in July, the first time overall spending had fallen for three consecutive months since February 2013,” said Visa’s UK & Ireland managing director Kevin Jenkins. “The figure provides further evidence that rising prices and stagnant wage growth are squeezing consumers’ pockets.

“The drop in spending was felt across a broader range of retail sectors last month, with household goods among the worst hit at -4.0%.”

According to the CSI, spending across Household Goods categories has either fallen or stagnated in each month since last December.

Visa’s UK Consumer Spending Index was compiled by IHS Markit; principal economist Annabel Fiddes commented:

“Reduced spending comes at a time when the UK economy has been expanding at a relatively modest pace while households have been facing strong increases in living costs and a slowdown in earnings growth. Notably, the latest ONS figures show total real pay falling at the quickest pace for nearly three years.

“Alongside the renewed squeeze on household budgets, uncertainties linger over the direction of the economy and the outcome of the ongoing Brexit negotiations which is weighing down consumer confidence. All this makes it seem unlikely that consumer spending will recover in the current challenging conditions and adds to expectations that the Bank of England will not hike rates anytime soon.”