Rising cost of living puts brakes on spending

UK retail sales were down in April as consumers hold back on big ticket items, says BRC.

According to the latest BRC-KPMG Retail Sales Monitor for April 2022, total sales fell 0.3% against an increase of 51.1% in April 2021.

UK retail sales decreased 1.7% on a Like-for-like basis from April 2021, when they had increased 39.6%.

Online Non-Food sales decreased by 13.9% during April, compared with growth of 11.3% in April 2021. Non-Food Online penetration rate decreased to 38.6% in April from 45.1% in April 2021.

Helen Dickinson OBE, Chief Executive | British Retail Consortium, said: “The rising cost of living has crushed consumer confidence and put the brakes on consumer spending. Sales growth has been slowing since January, though the real extent of this decline has been masked by rising inflation. Big ticket items have been hit hardest, as consumers reigned in spending on furniture, electricals and other homeware; compounded by delays on goods coming from China.

“Customers face a difficult year; with the Bank of England predicting inflation to reach more than 10%. Retailers are experiencing higher costs as a result of rising commodity prices, transport costs, labour shortages, delays at ports, and the war in Ukraine. Further headwinds are incoming, such as rising global food prices, which rose 13% between March and April. Retailers will continue to do all they can to mitigate the effects of these costs rises, but unfortunately they cannot absorb them all.”

 Paul Martin, UK Head of Retail at KPMG | KPMG, said: “The cost of living crisis came home to roost for retailers in April, with sales growth going into decline for the first time in 15 months.

“With interest rates and inflation rising and the Bank of England warning of a possible recession, the squeeze on disposable household income is starting to have an impact on the high street.  Against a backdrop of falling consumer confidence, the retail sector has a bumpy time ahead as they face spiraling cost pressures from all directions. 

“Many retailers will have no choice but to raise prices to protect margins, but the longer we see high inflation and real household incomes falling, the more likely it is that consumers will change their spending behaviour, prompting a decline in the health of the retail sector and possibly more casualties on the high street.”

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