British consumer spending increased at the slowest annual pace slowest in the first three months of 2017, in a further sign that one of the economy’s main engines is losing steam as Brexit preparations begin.
The survey by payment card company Visa may also undermine sterling.
Visa said real-terms spending increased 0.9% year-on-year in the three months to March, the weakest calendar-quarter performance since late 2013 and down from 2.7% in the last quarter of 2016.
In March alone, spending dropped 0.7% compared with the previous month, after being flat in February. The survey adds to a growing mass of indicators showing that rising inflation — caused in part by the pound’s post-Brexit vote tumble — is crimping consumer spending, just as Prime Minister Theresa May begins the UK’s EU divorce talks.
“Our data suggests that consumer spending is beginning to slow from the strong levels seen in late 2016, as rising prices increasingly squeeze household purchasing power,” said Kevin Jenkins, UK and Ireland managing director at Visa.