(Bloomberg) -- UK retailers reported another drop in sales as record-high inflation kept consumers from spending on discretionary products and services.
The British Retail Consortium said households are reining in spending, with many either downgrading to cheaper brands or slashing items from their grocery lists altogether. The industry group’s measure of retail sales declined by 1.3% from a year ago in the period through July 2 after a 1.5% drop the month before.
“Sales volumes are falling to a rate not seen since the depths of the pandemic,” said Helen Dickinson, chief executive officer of BRC.
Barclaycard, which manages about a third of the credit and debit card purchases in the UK, said spending in supermarkets fell 0.8% from a year prior while outlays on essentials increased by 4.4%. In a separate report, it also found that spending on non-essentials slowed sharply.
“The outlook continues to be challenging, although good weather might provide a welcome boost in July,” said Susan Barratt, chief executive officer of IDG, which contributed to the survey. “We’re forecasting that food inflation will reach 15% this summer.”
Almost half of consumers have begun to reduce their energy and water consumption to cope with rising bills. Utility costs have soared 40% from a year ago, according to Barclaycard. That’s reducing the money consumers have for other items.
“As the cost of living crisis continues to deepen, retailers face walking a fine line between protecting margins and further denting consumer confidence,” said Paul Martin, UK Head of Retail at KPMG.
©2022 Bloomberg L.P.
