The rising cost of living in the UK is dampening consumer spending

UK retail sales fell in April as shoppers tightened their belts in response to the cost of living crisis, according to new industry data.

Figures compiled by consultancy services firm KPMG with the British Retail Consortium, an industry body, showed retail sales fell at an annual rate of 0.3% in April, the first drop in 15 month and down from a 3.1% expansion the previous month. .

BRC chief executive Helen Dickinson said “the rising cost of living has shaken consumer confidence and dampened consumer spending”.

She added that big-ticket items have been hit the hardest as consumers have limited their spending on furniture, electrical appliances and other household items. Spending on these items was also impacted by delays in imported goods, due to supply chain disruption and Chinese lockdowns.

April’s annual comparison was dragged down by the reopening of many stores last year, but also boosted by rising prices as BRC data was not adjusted for inflation.

Given that inflation is at its highest rate in 30 years, “the small decline in sales masked a much larger decline in volumes once inflation is taken into account,” the BRC said.

Compared to April 2019, before the pandemic, retail sales rose 3.9%, a sharp slowdown from the previous month’s 5.4% expansion and the lowest figure this year.

Official data showed retail sales contracted in February and March as the cost of living crisis hit household incomes. The latest figures fuel economists’ worries about a further slowdown in economic growth in April and the rest of the year.

Economists polled by Reuters expect Britain’s economy to have barely changed in March, as the Bank of England last week warned of the risk of recession over the next two years.

Consumer spending data tracked by Barclaycard, the payments company, which monitors almost half of all credit and debit card transactions in the UK, also show weaker growth in April in many sectors, although its figures are also not adjusted for inflation.

Spending growth declined for takeaways, bars, pubs and clubs and for digital content subscriptions, such as Netflix and Amazon Prime.

However, both data sets also signaled that certain sectors were doing better thanks to the reopening of international travel, improving weather conditions and Queen Elizabeth II’s upcoming Platinum Jubilee.

Spending on clothing increased according to both sets of data, while the BRC also noted that gardening items saw stronger sales.

Barclaycard said spending by travel agents and airlines saw significant improvements, down just 3.5% and 9.9%, respectively, from April 2019, up sharply from contractions in March of 10.7% and 12%.

Spending on hotels, resorts and lodging also saw the fastest growth since September last year.

But Paul Martin, head of UK retail at KPMG, said overall “the retail sector has a turbulent time ahead as stores face increasing cost pressures. from all directions”.

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