Business

UK’s rising cost of living dampens 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 consulting services firm KPMG with the British Retail Consortium, an industry body, show retail sales fell at an annualized rate of 0.3% in April, the first decline in sales. 15 months and down from the 3.1% expansion in the previous month. .

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

She added that big-ticket items were hit the hardest, as consumers have curbed spending on furniture, electricity and other home appliances. Spending on these items has also been hit by delays to imports, supply chain disruptions and China’s lockdown.

The April year-to-date comparison was downgraded as more stores reopened last year but was also boosted by rising prices as the BRC data was not adjusted for inflation.

Suppose, I think Inflation is at its highest rate in 30 years“The small drop in sales masked a much larger drop in volume when inflation was taken into account,” the BRC said.

Compared to April 2019, before the pandemic, retail sales rose 3.9%, down sharply from the 5.4% increase in the previous month and the lowest figure this year.

Official data shows retail sales contracted in February and March as cost of living crisis on household income. The latest figures are raising concerns among economists that economic growth will continue to slow in April and the rest of the year.

Economists polled by Reuters expect the UK economy to be mostly flat in March, while last week Bank of England warning about the risk of recession in the next two years.

Consumer spending data tracked by Barclaycard, the payments firm, which tracks nearly half of the UK’s credit and debit card transactions, also showed weak growth in April. in many areas, although its figures are also not adjusted for inflation.

Spending growth fell on takeout, bars, pubs and clubs, as well as digital content subscriptions, such as Netflix and Amazon Prime.

However, both data sets also report some sectors performing better thanks to the reopening of international travel, improving weather and the upcoming platinum anniversary of Queen Elizabeth II.

Spending on clothing increased on both data sets, while the BRC also noted that horticultural goods had stronger sales.

Barclaycard reports that spending on travel agents and airlines has recorded significant improvements, falling only 3.5% and 9.9% compared to April 2019, respectively, up sharply from the previous level. down 10.7% and 12% respectively in March.

Spending on hotels, resorts and accommodation also grew at the fastest rate since September last year.

But Paul Martin, KPMG’s UK head of retail, says that overall “the retail sector has a tough time ahead as stores face rising cost pressures from all directions”.

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