UK consumers tighten their belts ahead of Christmas as cost of living rises

UK consumers are tightening their belts as the holiday season approaches, according to new data which shows retail sales growth lagged far behind inflation in November and underscores the impact of the housing cost crisis. life.

The value of retail sales rose 4.2% year-on-year in November, according to a report released on Tuesday by the British Retail Consortium, a trade body, in association with professional services group KPMG.

As Black Friday deals kicked off this winter’s shopping season, November’s figure was an improvement on the 1.6% annual growth rate recorded the previous month.

However, the figures are not adjusted for consumer price inflation, which hit a 41-year high of 11.1% in October, so the annual rise in the value of sales masks a much larger drop. significant increase in sales volumes, once the CPI is taken into account.

Paul Martin, head of UK retail at KPMG, said retailers were hoping the “Christmas feel-good factor” would outweigh weak consumer confidence over the festive season, adding: “ The next few weeks could be crucial for their [business’s] survival.”

But BRC chief executive Helen Dickinson warned that ‘the cost of living crisis means many families could backtrack on their festive plans’.

Separate data released by payments firm Barclaycard on Tuesday showed consumer spending rose 3.9% year-on-year in November, from 3.5% year-on-year in October.

Barclaycard, which collects figures for nearly half of UK credit and debit card transactions, attributed most of the rise to the high cost of basic necessities.

The annual rate of spending on basic necessities, such as groceries, fuel and health care, rose 7.1% in November, topping the previous month’s figure of 5.7%.

Rising grocery spending, largely due to food price inflation, rose further as many UK shoppers said they stocked up on Christmas items earlier this year to help spread the costs, Barclaycard said.

A further measure in Barclaycard’s monthly data showed spending on utilities rose just over 40% in November, outpacing October’s 36% increase as colder weather prompted more households turning on their heating for the first time.

Barclaycard director Esme Harwood said: ‘Budget cuts are affecting non-essential spending on clothing, department stores and restaurants.

Barclaycard’s consumer confidence survey for November showed half of those polled planned to cut spending this Christmas, either by buying fewer gifts or cutting back on social activities.

As inflation weighs on the discretionary budgets of many households, “many Britons intend to cut festive spending on gifts and parties in a bid to save money,” Harwood added.

Leave a Comment