Positive start to the year for retailers

Positive start to the year for retailers

Retailers and consumers experienced a "feelgood" start to the year as the cold snap prompted shoppers to stock up on winter clothing in the January sales, a report has found.

Consumers' spending in January was up by 2.7% across the UK year-on-year in January, marking the strongest annual increase since May 2015, according to the Visa Europe UK Consumer Spending Index.

The growth in spending was led by a 9.7% year-on-year increase in spending in hotels, restaurants and bars, while expenditure on recreation and culture was also up by 7.8% annually.

Spending on clothing and footwear also saw a "solid" 5% annual increase, offsetting a 1.2% annual fall in December, the report said.

And spending on food, drink and tobacco also saw an annual increase of 4.2%.

The report said that low inflation and real wage growth are expected to support consumer spending in 2016, and are likely to help a sustained growth in expenditure this year.

Annabel Fiddes, an economist at Markit, which compiles the report, said of the increase in clothing spending: "This coincided with a cold snap in the UK after surprisingly warm winter weather in December, suggesting that consumers topped up their winter wardrobes at the start of this year as a result.

"Overall, while a positive economic backdrop in the UK remains supportive of higher expenditure, an increasingly murky global economic picture may weigh on consumer confidence and spending in the coming months."

Visa's index is based on spending on Visa debit, credit and prepaid cards, which account for £1 in £3 of all UK spending. The index is adjusted to reflect overall consumer spending, not just that on cards.

Kevin Jenkins, UK and Ireland managing director of Visa Europe, said: "It's a feelgood start to the year for retailers and consumers, despite the global economic jitters."