Shoppers "put brakes" on spending due to surge in cost of living
Consumers have “put the brakes” on their shopping habits due to the soaring cost of living, according to new figures.
The latest BRC-KPMG retail sales monitor revealed that sales dipped in April after a sharp downturn in consumer confidence.
Separate figures from Barclaycard showed that credit card spending on retail and eating out slowed last month as people tightened their belts.
British Retail Consortium (BRC) CEO Helen Dickinson, said: “The rising cost of living has crushed consumer confidence and put the brakes on consumer spending.”
The data from the BRC and KPMG reported that total sales fell 0.3% in April – the first decline in 15 months.
On a like-for-like basis, UK retail sales dropped by 1.7% as shoppers reduced their spending on big ticket items.
Dickinson added: “Sales growth has been slowing since January, though the real extent of this decline has been masked by rising inflation.
“Big ticket items have been hit hardest as consumers reined in spending on furniture, electricals and other homeware, compounded by delays on goods coming from China.
“Meanwhile, thanks to the April sunshine, garden goods and fashion saw stronger sales, particularly occasion-wear as consumers prepared for summer and this year’s wedding season.”
Non-food sales increased by 6.9% over the three months to April, compared with the same period last year, driven by higher inflation.
Total food sales for the three-month period declined by 1.3%.
Paul Martin, UK head of retail at KPMG, said: “With interest rates and inflation rising and the Bank of England warning of a possible recession, the squeeze on disposable household income is starting to have an impact on the high street.
“Against a backdrop of falling consumer confidence, the retail sector has a bumpy time ahead as they face spiralling cost pressures from all directions.”
Figures from Barclaycard showed that consumer card spending increased by 18.1% in April, compared with pre-pandemic figures from the same month in 2019.
The data also highlighted that spending on essential items increased by 17.4%, although this represented a slowdown from 18.1% in March due to reduced fuel spending.
Despite the challenging economic backdrop, spending on hotels, resorts and accommodation rose 16.6% compared with three years ago, the category’s highest growth since September last year.
Takeaways, nights out and subscriptions all had smaller increases than in March as rising prices led to changes in consumer behaviour.
Jose Carvalho, head of consumer products at Barclaycard, said: “The impact of rising living costs on consumer spending is starting to show, with a number of categories – including subscriptions, takeaways, and bars, pubs and clubs – seeing less growth than in March as Brits begin to feel the pinch.
“However, the improvements seen by airlines and travel agents are particularly positive, and hopefully point to a recovery in spending on international travel later this year.”