Consumer spending slows in August as inflation bites
Britons slowed their spending habits over the last month amid the looming spike in household energy bills, according to new figures.
Data from the British Retail Consortium (BRC) revealed that sales slowed significantly last month, as only price rises kept sales growth in positive territory amid tumbling trading volumes.
It came as separate figures from Barclaycard also showed that card spending slowed to its lowest levels for more than a year.
The BRC-KPMG retail sales monitor for August revealed that total sales grew by 1% over the month, compared with 3% over the same month last year.
It comes after 2.3% retail sales growth in July.
Helen Dickinson, chief executive of the BRC, said that the decline came as clothing demand reduced as the summer came to a close.
“Retail sales growth slowed in August compared to the previous month as consumers reined in spending amidst the spiralling cost of living,” she said.
“While inflation in retail prices is lower than general inflation at over 10%, 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.”
The figures showed that food sales increased by 3.8% over the three months to August, while non-food sales, which include clothing and homeware, fell by 2% over the latest quarter.
Don Williams, retail partner at KPMG, said: “The heatwave saw strong growth for health items such as suntan lotion, whilst food and drink sales for summer barbeques grew by 5% year on year and home accessories also saw growth for the first time in months.
“Online sales dipped by over 6% in August, however the locked-in step-up of online penetration remains.”
Elsewhere, Barclaycard revealed that consumer card spending grew by 4.7% in August, representing the smallest uplift since March 2021.
The credit card giant said spending on essential items grew by 7.2% year-on-year, the biggest increase since December last year, due to rising inflation.
Supermarket spending also reported its biggest increase for 18 months, at 4.7%, as food inflation jumped to a new 14 year high.
Fuel spending also continued to soar, increasing by 23.9% over the month, although this reflected a slowdown in recent growth following a cooling of petrol and diesel prices in recent weeks.
Jose Carvalho, head of consumer products at Barclaycard, said: “The cost-of-living is clearly leading Brits to cut-back on some non-essential purchases to ensure they can afford the increasing costs of their weekly grocery shop and household utility bills.
“Yet, despite these inflationary pressures, consumers have still been keen to enjoy the summer weather by eating and drinking out and going on staycations with friends and family.”
Published: by Radio NewsHub