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UK retail gross sales registered solely a modest rise final month and didn’t hold tempo with inflation, as unhealthy climate and “cautious” shoppers hit spending.
The worth of retail sales elevated at an annual charge of 1.1 per cent in February, under the two.4 per cent common of the earlier three months, in line with the British Retail Consortium.
Non-food gross sales registered zero progress in February in contrast with the identical month in 2024, knowledge printed by the commerce physique confirmed on Friday, under 2.5 per cent common annual progress within the earlier three months.
BRC chief government Helen Dickinson mentioned retail gross sales “noticed extra modest progress in February”, with style performing “poorly as a result of gloomy climate all through the month”.
However she added that retailers have been “hopeful the early March sunshine kick-starts spending on spring and summer season wardrobes”.
The worth of gross sales progress, collected by the BRC with consultancy KPMG, was additionally nicely under the speed of inflation, which rose more than expected to 3 per cent in January.
This means that customers continued to chop the amount of products they bought as they’ve finished all through most of the price of dwelling disaster.
Linda Ellett, UK head of shopper, retail and leisure at KPMG, mentioned: “Customers stay cautious with their spending and plenty of are persevering with to prioritise saving, journey and experiences.
“Nervousness in regards to the financial system is deferring different huge ticket buying, however events and provides are nonetheless tempting consumers into some impulsive spending,” she added.
The financial system grew solely marginally within the second half of 2024, and employers have in current months warned about job cuts following rises within the minimal wage and nationwide insurance coverage contributions. Introduced within the autumn Funds, the will increase will take impact in April.
The BRC knowledge chimes with figures from Barclays, which on Tuesday reported that shopper spending rose at an annual charge of 1 per cent final month. That is down from 1.9 per cent in January and likewise nicely under the speed of inflation.
Barclays mentioned spending on electronics bucked the development, with progress of 6.7 per cent in February, citing “upgrades to home-entertainment” merchandise purchased between 2020 and 2021 and new product launches as attainable contributors.
Nevertheless, most different classes, together with supermarkets, sports activities and outside, and bars and pubs, reported outright contractions.
The BRC and Barclaycard knowledge add to proof that low shopper confidence and issues in regards to the labour market are hitting family spending and financial progress. That is regardless of official figures exhibiting that wages have outpaced inflation since mid-2023.
Whether or not weak financial progress is the results of poor demand — which lessens underlying value pressures — or provide points is a key query for the Financial institution of England because it weighs the long run path of rates of interest.
BoE governor Andrew Bailey last week performed down the dangers of a self-reinforcing acceleration in value progress. “The demand weak spot argument could also be getting a bit stronger relative to final yr,” he informed MPs.
Dickinson mentioned the newest BRC knowledge would depart many retailers “uneasy” as they braced for £7bn of recent prices from the Funds and packaging levies in 2025.
“The business is already doing all it may to soak up current prices, however they are going to be left with little alternative however to extend costs or scale back funding in jobs and outlets, or each,” she added.
