Shoppers are cutting back on purchases of non-essential items as they try to cover their sky-rocketing utility bills and higher food prices, surveys showed today (6).
With the country’s next prime minister Liz Truss promising help to tackle the cost-of-living crisis, the British Retail Consortium said the value of total sales at its members – mostly large chains and major supermarkets – rose by 1.0 per cent last month compared to August 2021, weaker than July’s 2.3 per cent increase.
On a like-for-like basis, ironing out changes in shop floor space, sales rose by 0.5 per cent slowing from July’s 1.6 per cent rise. The figures are not adjusted for inflation, meaning the small rise in sales masked a much larger drop in volumes.
Over the three months to August, food sales increased 3.8 per cent on a total basis and 3.3 per cent on a like-for-like basis. This is above the 12-month total average growth of 0.8 per cent. For the month of August, food was in growth year-on-year while non-Food retail sales decreased by 2.0 per cent on a Total basis and 2.6 per cent on a like-for-like basis.
Reacting to the figures, Helen Dickinson OBE, Chief Executive -British Retail Consortium, said that consumers reined in spending in August amidst the spiralling cost-of-living.
“While inflation in retail prices is lower than general inflation at over 10 per cent, this still represents a significant drop in sales volumes. For the first time in recent months, clothing sales were sluggish as summer events ended, and parents held back on back-to-school spending. White goods and homeware remained hardest hit, but products such as air fryers and knitwear did get a boost as thrifty consumers prepare for soaring energy bills.”
“With some predictions of inflation reaching 20 per cent in the new year, households and retailers are preparing for a particularly tough time ahead. As retailers face into their own rising costs from all directions, they continue to do all they can to protect customers from price rises. The new Prime Minister could help relieve some of the cost burden, and ease the upwards pressure on prices, by freezing the business rates multiplier for all retail businesses next year. Without this, inflation could whack an additional £800 million onto retailers’ rates bills, which will inevitably lead to even higher prices for households at a time when people’s income is under unprecedented pressure.”
Don Williams, a retail partner at KPMG which co-produces the data, said that August data revealed a significant fall in clothing sales, the category which has been the most robust performer this year which could signal the start of shoppers pulling back from non-essential spending.
“As consumers return from summer holidays to an 80 per cent increase in the energy price cap, double digit inflation and Christmas just three pay cheques away, the brakes could be firmly applied on non-essential spending for most UK households.
“The storm clouds are closing in as retailers brace themselves for a fall in demand – at a time when their own margins are under pressure from rising costs. Supporting customers through these difficult times will be paramount for the health of the sector as we move through the rest of this year,” Williams said.
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