The big freeze: consumer spending in January down -14% year-on-year

After their pre-Christmas shopping spree, Irish consumers cut back their expenditure significantly in January, new figures have revealed.

The data from Revolut, the FinTech with over 1.2million customers in Ireland, suggests that shoppers pulled in their horns significantly during lockdown.

Total consumer spending in January 2021 was a sobering 14% lower than it was in January 2020, the figures show. While sales of digital content and home-related spending both soared, they were not enough to offset huge year-on-year falls in spending on hospitality, travel and  clothing.

Spending in bars was down -94% compared to January 2020, while expenditure in restaurants was -70% lower. Hotel spending fell by 86% year on year, and that nation’s shuttered cinemas endured a fall of 99% compared to a year earlier.

The impact of people not going to work in offices, and not going to bars and restaurants, was also seen in the fashion sector. Spending on clothing among Irish Revolut users was down -15% compared to a year previously, while spending on shoe shops fell by -44%. However at the same time, spending in sportswear stores was up year-on-year by 27% - possibly as a result of more people using ‘athleisurewear’ as their home-based clothing of choice, including for remote working.

Notably, spending in this January's lockdown was -22% lower than in November last year, when level 5 restrictions were also in place nationwide. This data would suggest that the decline was not just due to the physical impact of retailers’ doors being closed, suggested Paul Scanlon, Professor of Economics at Trinity College Dublin.

January marked a period of unrelentingly bad news on the virus front, as cases soared and hospital admissions peaked,’ said Professor Scanlon. ‘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.’

Professor Scanlon added, however: ‘Going forward, the recent decline in virus cases should bolster consumer confidence, and future Revolut reports will reveal how transitory the spending decline turns out to be.’

Article Published: 08/02/2021