UK customers tighten belts earlier than Christmas as value of residing bites

UK customers are tightening their belts within the run-up to the festive interval, in keeping with new information that confirmed retail gross sales development lagging far behind inflation in November and pointed to the impression of the price of residing disaster.

The worth of retail gross sales rose 4.2 per cent yr on yr in November, in keeping with a report revealed on Tuesday by the British Retail Consortium, a commerce physique, in affiliation with skilled companies group KPMG.

As Black Friday provides launched this winter’s buying season, November’s determine was an enchancment on the 1.6 per cent annual development price recorded within the earlier month.

Nevertheless, the figures aren’t adjusted for shopper value inflation, which hit a 41-year excessive of 11.1 per cent in October, so the annual rise within the worth of gross sales conceals a a lot bigger drop in gross sales volumes, as soon as CPI is accounted for.

Paul Martin, UK head of retail at KPMG, mentioned retailers had been hoping that the “Christmas feelgood issue” would trump low shopper confidence in the course of the festive season, including: “The subsequent few weeks could possibly be important to their [business’s] survival.”

However BRC chief govt Helen Dickinson warned that “the price of residing disaster means many households may dial again their festive plans”.

Separate information revealed on Tuesday by funds firm Barclaycard confirmed shopper spending rose 3.9 per cent yr on yr in November, up from the three.5 per cent annual development recorded in October.

Barclaycard, which gathers figures from virtually half of the UK’s credit score and debit card transactions, attributed many of the rise to the excessive value of necessities.

The annual price of spending on requirements, resembling groceries, gasoline and healthcare, elevated by 7.1 per cent in November, beating the earlier month’s determine of 5.7 per cent.

The enhance in grocery spending, largely pushed by meals value inflation, has surged additional as many UK consumers report stocking up on Christmas objects earlier this yr as a way to assist unfold the associated fee, mentioned Barclaycard.

A further measure in Barclaycard’s month-to-month information confirmed spending on utilities rose by simply over 40 per cent in November, exceeding October’s 36 per cent improve, because the colder climate prompted extra households to change on their heating for the primary time.

Barclaycard director Esme Harwood mentioned: “Cutbacks are affecting non-essential spending on clothes, shops and eating places.”

Barclaycard’s shopper confidence survey for November confirmed that half of respondents deliberate to scale back spending this Christmas, both by shopping for fewer items or scaling again on social actions.

As inflation strains the discretionary budgets of many households “many Brits intend to scale back festive spending on presents and events in an effort to economize”, added Harwood.