Year-on-year consumer spending has fallen for the first time in almost four years, figures from credit card firm Visa reveal.
Visa says the drop in spending was seen across a broad spectrum of sectors last month, including clothing, food, transport, and household goods.
Its data shows that physical “bricks and mortar” store sales dropped at their fastest pace for more than five years in May, down 5.3 per cent compared to the same period last year.
Overall spending fell 0.8 per cent in May, compared to the year previous.
Kevin Jenkins, UK and Ireland managing director at Visa, said: “Our index clearly shows that with rising prices and stalling wage growth, more of us are starting to feel the squeeze.
“Bricks and mortar retailers had a particularly challenging month, with sales dropping at the quickest level in over five years, at a time when warmer weather and the May bank holidays would usually drive shoppers on to the high street.”
The data is based on a survey of one-third of money spent via Visa debit, credit, or prepayment cards in Britain, which accounts for almost £10 billion of sales every year.
Experts say the figures highlight rising rates of inflation and stagnant wages.
Commenting on the report, Annabel Fiddes, an economist at IHS Markit, said: “The outlook for consumer spending continues to look relatively bleak, with households facing faster increases in living costs and muted wage growth.
“The squeeze on household finances is likely to get worse as the Bank of England forecasts faster increases in consumer prices in the coming months.”