Retail sales increased 5.2% on a like-for-like basis in April, although with inflation running at over 10%, the figure suggests volumes continue to fall as cash-strapped shoppers adjust their spending habits.
The data from the BRC–KPMG Retail Sales Monitor shows it was a mixed bag for the high street, with sales of footwear, food and jewellery performing well in sales value terms, whilst more categories slipped into negative territory as clothing and computing continued to witness declining demand.
Helen Dickinson, Chief Executive of the BRC, commented: “Retailers hope sales will improve over the warmer summer months, especially as consumer confidence stabilises and inflation begins to ease. However, they continue to face huge cost pressures from a tight labour market, high energy prices, and other rising input costs, with many retailers reporting lower profits this year as a result.”
Meanwhile, Paul Martin, UK Head of Retail at KPMG, was less positive on the consumer outlook, noting that with government energy support coming to an end and other household bills rising, it was likely that the next few months will continue to be challenging for the retail sector.
He added: “Much hinges on whether soaring food inflation can be brought under control enough to allow consumers to comfortably start spending again on non-essential items.”
Separate data from Barclays, also published today, showed consumer spending on payment cards rose by 4.3% year-on-year in April, which is also well short of inflation.
The bank noted that rising costs continued to put pressure on household finances, with two-thirds of consumers saying they were looking for ways to cut weekly shopping costs by switching to lower-priced or discounted items. “High inflation continues to squeeze real household disposable incomes and constrain consumption,” said Barclays economist Abbas Khan.
Rate-setters at the Bank of England are due to meet this week as they battle to tame inflation. Many economists predict they will raise interest rates by 0.25 percentage points, taking them to a 14-year high of 4.5%.
NAM Implications:
- Law of supply & demand…
- And volume sales should be the only KPI for realists.
- Meanwhile, consumers’ cost pressures are still emerging from the pipeline…
- Cautious optimism at best…
