Retail sales growth in the UK eased last month as concerns over inflation and potential tax increases in the autumn Budget weighed on consumers.
The BRC – KPMG Retail Sales Monitor shows total sales in the sector increased by 2.3% year-on-year in September, slightly ahead of the 12-month average growth of 2.1% but down on the previous month’s figure of 3.1%.
Food sales rose by 4.3%, above the 12-month average growth of 3.4%, while non-food sales increased by 0.7%, below the 12-month average of 0.9%.
Helen Dickinson, Chief Executive of the BRC, noted that the looming Budget, higher household bills, and mild weather had impacted demand, while growth in food sales was largely inflationary rather than volume growth.
“Rising inflation and a potentially taxing budget are weighing on the minds of many households planning their Christmas spending,” she said.
Linda Ellett, UK Head of Consumer, Retail & Leisure at KPMG, added: “As we enter the ‘golden’ quarter for the sector, retailers are planning product ranges and promotions to try and increase that rate of sales growth. They are also mindful that the Budget is beginning to move into view, with related detail about business rates reform and a general need for a boost to consumer confidence.”
Commenting on the food & drink sector, Sarah Bradbury, CEO at IGD, noted that grocery volumes remained sluggish, with household budgets under pressure due to the steady rise in inflation since the start of the year. “Despite grocery retailers announcing early price reductions to support budget-conscious shoppers, ongoing speculation surrounding Autumn Budget announcements may temper shopper sentiment ahead of the festive period,” she said.
NAM Implications:
- Brand owners are having to spend in order to rebuild loyalty and brand premia.
- While retailers are running promotions to attract customers.
- All because savvy consumers are shopping around for better prices and own-label equivalents….
- …all because of uncertainties regarding government actions.
- An issue of confidence and trust, everywhere…
- …as consumers continue to question what they get for their money.
