UK customers sharply in the reduction of their spending in February as hovering residing prices broken family funds, retailers have warned, regardless of sturdy gross sales of jewelry and fragrances for Valentine’s Day.
Highlighting the affect of the price of residing disaster on the financial system earlier than Jeremy Hunt’s finances subsequent week, the British Retail Consortium (BRC) mentioned sky-high power payments and the rising price of a weekly store had been forcing customers to chop again.
Complete gross sales rose by 5.2% in February in contrast with a yr earlier, up barely from January’s annual development fee of 4.2%. Nevertheless, a lot of the rise was a results of excessive inflation pushing up the worth of products being bought, masking weaker gross sales volumes.
“Many customers will probably be involved as they put together for additional power value and tax rises in April,” mentioned Helen Dickinson, the chief government of the BRC.
She warned Hunt that pressing steps had been required within the finances to assist retailers climate the financial storm with out passing on massive value will increase to customers.
“To guard folks from ongoing value rises for items, authorities should keep away from further regulatory prices on enterprise that compromise retailers’ means to put money into decreasing costs and in different areas that may contribute to the UK’s financial restoration,” Dickinson mentioned.
In keeping with the newest snapshot of excessive road spending, price-sensitive customers buying round for Valentine’s Day items – together with perfume and jewelry – helped to prop up gross sales values in February. Nevertheless, the amount of products purchased was down on a yr in the past.
Power-saving home equipment additionally continued to promote properly, however the rush for heat coats and boots subsided after a splurge within the January gross sales fizzled out.
Separate figures from Barclays confirmed shopper card spending – which incorporates spending in outlets but in addition on journey, hospitality and different companies – rose by simply 5.9% in contrast with a yr in the past, considerably beneath the annual inflation fee of 10.1%.
Barclays, which processes virtually half of UK credit score and debit card transactions, mentioned the weak point in gross sales was due to a discount in discretionary purchases due to the price of residing squeeze.
The figures had been additionally affected by the lifting of plan B Covid restrictions in February 2022 – which led to a spike in spending due to pent-up demand – making it harder to beat that degree of spending in February 2023.
Card spend on clothes fell by 1.2% in contrast with the identical month final yr. Spending in eating places dipped 3%, whereas pubs, bars and golf equipment skilled annual gross sales development of seven.7%, considerably decrease than the 18.1% annual development fee in January.
In keeping with a survey of two,000 customers on behalf of Barclays, greater than two-thirds mentioned they had been searching for methods to scale back the price of their weekly store.
Virtually half of those customers mentioned they had been slicing down on luxuries or one-off treats, whereas extra individuals are switching to low cost retailers and buying round for offers.
Meals shortages are additionally influencing grocery buying habits, with half of customers noticing that some grocery store cabinets are significantly emptier than regular amid nationwide challenges with the provision of salad, tomatoes and eggs.
Paul Martin, the UK head of retail at KPMG, which helps to compile the BRC retail gross sales monitor, mentioned: “Shoppers are persevering with to carry again on non-essential spending with gross sales of clothes, footwear and equipment – which have been very influential in spending for a lot of months – persevering with to say no in February.
“Furnishings and homeware have been driving gross sales development on the excessive road and on-line however we’re beginning to see extra classes report detrimental gross sales yr on yr, as family budgets stay squeezed.”