According to the latest sales-monitor report from the British Retail Consortium (BRC) and KPMG which was released this week, in September, retail sales in the UK fell as the cost of living crisis continued to weigh on household budgets.
The survey found that increasingly tight budgets of consumers curtailed big-ticket spending, as winter clothing sales were reduced, due to the unseasonably warm weather.
Although Britons increased the amount they spent shopping by 2.7% year over year in September, compared to August, expenditures fell by 4.1%, according to the figures.
Helen Dickinson, CEO of the BRC, said, “Big-ticket items such as furniture and electronics performed poorly as consumers limited spending in the face of higher housing, rental, and fuel costs. The Indian summer also meant sales of autumn clothing, knitwear, and coats have yet to materialize.”
Coming in well below the rate of inflation, September’s figures were the second weakest monthly figures of the year so far, indicating there was a decline in the volume of goods sold as well.
With soaring interest rates squeezing household incomes, and the unemployment numbers in the UK rising, sluggish retail sales numbers have been adding to the fears over year-end profits. The reduced sales numbers are heightening worry ahead of the so-called “golden quarter,” which includes the run-up to the holiday season, when shop owners will see their busiest period of sales.
Paul Martin, UK head of retail at KPMG said, “The fight for Christmas shoppers will be fierce this year, with promotions likely to be earlier and abundant in a bid to loosen tight household purse strings.”
He added, “Consumers will continue to seek out good deals, with price driving purchasing decisions. This is likely to be one of the most important golden quarters that we have seen in years.”
As British consumer activity has been weighed down by a stifling cost of living crisis, the effects of successive interest rate increases have caused fears of a recession to take hold.
In August and September, data from the Purchasing Managers Index, a measure reflecting overall economic health, showed an economic contraction, while unemployment figures have been increasing for three straight months.
