Online retails rake in the cash as consumer spending spikes

Posted by Ben Tumilty in Personal Finance on 8 December 2016 - Ben is a Credit Analyst at checkmyfile

So it’s fair to say that we spent a lot over Black Friday & the Cyber Weekend period. A bit like having a birthday but deciding to turn it into a birthday week (and then sometimes a birthday month), we went crazy as retailers shoved three weeks’ worth of funky deals down our throats.

As a result, household spending climbed 3.2% in November compared to November 2015 – the biggest rise in 22 months, according to Visa’s UK Consumer Spending Index. Online spending in the 12 months to November grew by 12.5% - this is the highest annual growth rate on record for the Consumer Spending Index, which started in 2009.

The figures show that over £1.2bn was spent on Black Friday. I think we can all agree, that’s quite a lot. But as with a birthday week, we went quite heavy in the week to Cyber Monday, to the tune of nearly £6.5bn.

Kevin Jenkins from Visa, speaking about the information released, explains, “The Christmas shopping season got off to a good start for consumers and retailers alike. The shopping season seems to have started earlier this year too, as we saw solid spending growth rates in the weeks leading up to Black Friday. As Black Friday shifted further online this year, e-commerce retailers were the clear winners in November.”

Some of us are no doubt people who like to leave our Christmas shopping until the last minute, so we can still expect the few days before Christmas to be pretty busy. But some critics are concerned regarding the possibility that we may have peaked a little early this year, and we might not be able to continue the spending.

Annabel Fiddes from IHS Markit is one of those. Commenting, she says, “Whether this strong performance can be sustained into December and beyond is increasingly unclear. Notably, consumer confidence has declined in each of the past two months, while forecasts of rising inflationary pressures and unemployment in the next year are all likely to weigh on expenditure growth going forward.”

As Fiddes says, there is no guarantee that this expenditure will keep up. But with the January sales just round the corner, we may find that a lull in spending during December is nothing more than a Christmas break for punters.

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