Home Business Rising cost of living in the UK is holding back consumer spending

Rising cost of living in the UK is holding back consumer spending

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According to new industry data, retail sales in the UK fell in April when shoppers tightened their belts in response to the cost of living crisis.

Data collected by KPMG’s consulting services with the UK Retail Consortium, an industry body, showed that retail sales fell 0.3% year-on-year in April, the first 15-month decline from a 3.1% increase. the previous month. .

BRC executive director Helen Dickinson said “rising cost of living has stifled consumer confidence and hampered consumer spending.”

She added that valuable goods suffered the most, as consumers withheld the cost of furniture, electricity and other household appliances. Expenditures on these items have also suffered from delays in imported goods due to supply chain disruptions and Chinese blockades.

The annual comparison in April was delayed by the reopening of many stores last year, but also contributed to rising prices as BRC data is not adjusted for inflation.

Provided inflation is at its highest rate in 30 years“A small drop in sales masked a much larger drop in volumes after inflation,” the BRC said.

Compared to April 2019, before the pandemic, retail sales rose 3.9 percent, down sharply from a 5.4 percent increase in the previous month and the lowest this year.

Official data showed that in February and March, retail sales fell cost of living crisis hit on household incomes. The latest figures fuel economists’ concerns about a further slowdown in economic growth in April and the rest of the year.

Economists polled by Reuters expect the UK economy to change little in March, but last week The Bank of England warned risks of recession over the next two years.

Consumer spending data tracked by Barclaycard, which controls almost half of all credit and debit card transactions in the UK, also shows a slowdown in growth in April in many sectors, although its figures have not been adjusted for either. adjusted for inflation.

Rising spending has fallen on takeaways, bars, pubs and clubs, as well as subscriptions to digital content such as Netflix and Amazon Prime.

However, both datasets also report that some sectors are performing better thanks to the resumption of international travel, improved weather and the platinum anniversary of Queen Elizabeth II.

Clothing costs rose according to both data sets, while the BRC also noted that garden products received higher sales.

Barclaycard reported that spending on travel agencies and airlines recorded a significant improvement, declining by only 3.5% and 9.9% respectively compared to April 2019, compared to March reductions of 10.7% and 12% respectively.

Expenditures on hotels, resorts and accommodation also recorded the fastest growth since last September.

But Paul Martin, head of KPMG’s retail division in the UK, said that in general, “the retail sector is facing a difficult time as stores face a spiraling pressure on costs from all sides”.

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