Rising inflation, particularly for food, shook consumer confidence this month, according to research by the British Retail Consortium (BRC).
Latest BRC-Opinium data shows consumer expectations of the state of the economy over the next three months worsened to -33 in July, compared to -28 in June, while consumer expectations of their personal financial situation also deteriorated to -7, from -5 the previous month.
Expectations over the coming three months of their personal spending on retail increased to +3, from +2 in June, while their overall spending expectations rose to +16 from +12 in June.
The trade association’s CEO, Helen Dickinson, commented: “With the UK economy shrinking for the second consecutive month, it is little surprise that consumer confidence fell in July. Rising inflation, particularly for food, has put more pressure on personal finances, increasing the cost of living. This has caused spending expectations to rise, particularly for groceries, as households anticipate higher prices at the till.”
She added: “Despite fierce competition between retailers, retail inflation has risen steadily over the last nine months as a result of the Chancellor’s last Budget, which significantly increased employment costs. Further tax rises hitting the retail industry at the next Budget would likely fan the flames of inflation as retailers are forced to increase prices. The Chancellor has the opportunity to support households and high streets: the proposed business rates reforms could make the system fairer, provided government ensures that no store pays more as a result.”
NAM Implications:
- The impacts of the last Budget tax increases are evident in current prices.
- And anticipated extra taxes in the next Budget are helping to maintain consumer uncertainties.
- Meanwhile, continuing Shrinkflation:
- ‘More & more for less & less’
- Doesn’t help…
