Retailers suffered a disappointing August as looming household bill increases saw consumers reining in their spending, figures show. Total UK retail sales increased by just 0.7% year on year, plunging from last August’s 3.1% and below the 12-month average growth of 1.6%, according to the British Retail Consortium (BRC) and KPMG. Food sales were up 2.6% on the year, but even this was below last August’s growth of 4.7% and below the 12-month average of 3.2%.
Non-food sales were down 0.8% on a year ago, against growth of 1.8% last August and below the 12-month average growth of 0.2%. A shopper on Oxford Street, London, BRC lead economist Harvir Dhillon said: “August was a disappointing month for retail sales. Despite pockets of growth, particularly in some food categories, overall performance was below the average for the past year.
With the cost of household bills rising, and set to rise further, many shoppers have clearly been tightening their belts. This was particularly true for discretionary spending, as big-ticket purchases like furniture and household appliances declined and consumers opted to instead treat themselves to smaller luxuries in health and beauty.” Separate figures from Barclays show consumer card spending grew by 2.1% year on year in August, up from July’s 2% increase. Consumers’ confidence in their household finances reached its highest level in six months, at 66% in August, up from 64% in July.
Consumers also reported feeling more confident in their ability to live within their means at 71%, up from 69%. Despite improving consumer confidence, 84% are concerned about rising prices. Jack Meaning, chief UK economist at Barclays, said: “Consumer spending and confidence remained resilient in August, even as pressures from the Middle East began to filter into prices.
This positive news suggests consumers should be able to weather the bout of narrowly focused, temporary inflation we think is coming down the track. However, this week has shown risk remains. If the situation in the Middle East persists or intensifies in the coming months, squeezed households may need to be even more discerning with their spend.”
Source: The Independent
