Spending declines as consumers pull back after Christmas

Consumer spending declined last month as households cut back after Christmas and as the Covid lockdown reduced shopping opportunities.

Total spending fell 14 per cent year on year, with increased sales of digital content and spending on home-related goods failing to offset big declines in hospitality, travel and clothing.

Figures compiled by fintech Revolut show spending in bars was down 94 per cent compared with January 2020, while expenditure in hotels and restaurants fell 86 per cent and 70 per cent respectively. Cinema expenditure slumped by 99 per cent compared with the same month a year earlier.

With few people leaving home, spending on clothes was down 15 per cent, with shoes falling 44 per cent. Sales of sportswear rose 27 per cent as more people resorted to wearing athleisure.

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"January marked a period of unrelentingly bad news on the virus front, as cases soared and hospital admissions peaked," said Paul Scanlon, professor of economics at Trinity College Dublin.

“Added to the mix is the severity of the current lockdown, which coincided with the traditional period of winter sales. All of these factors, coupled with the ongoing delays on vaccine rollout, no doubt dented consumer confidence,” he added.

Prof Scanlon forecast a rise in consumer confidence as the number of Covid cases declines.