The soaring cost of living has hit the confidence of British consumers and has “put the brakes” on consumer spending, the latest retail statistics show.
Retail sales dipped in April after a sharp downturn in consumer confidence, according to a report by the BRC-KPMG retail sales monitor.
Total sales fell by 0.3 percent in April, the first decline in 15 months, the report said.
Helen Dickinson, chief executive of the British Retail Consortium, said, “The rising cost of living has crushed consumer confidence and put the brakes on consumer spending.”
She said sales growth has been slowing since January, though the real extent of this decline has been masked by rising inflation.
“Big ticket items have been hit hardest, as consumers reigned in spending on furniture, electricals, and other homeware,” she said, adding that the trend has been exacerbated by delays on goods coming from China, which has been mired in COVID-19 lockdowns as a result of the Chinese Communist Party (CCP) regime’s zero-COVID policy.
Paul Martin, UK head of retail at KPMG, said: “With interest rates and inflation rising and the Bank of England warning of a possible recession, the squeeze on disposable household income is starting to have an impact on the high street.
“Against a backdrop of falling consumer confidence, the retail sector has a bumpy time ahead as they face spiralling cost pressures from all directions.”
Meanwhile, statistics released by Barclaycard showed that credit card spending on retail and eating out slowed last month as people tightened their belts.
“The impact of rising living costs on consumer spending is starting to show, with a number of categories—including subscriptions, takeaways, and bars, pubs, and clubs—seeing less growth than in March as Brits begin to feel the pinch,” said Jose Carvalho, head of consumer products at Barclaycard.
Last week, the Bank of England, Britain’s central bank, raised its key interest rate to 1 percent, the highest level in 13 years, as policymakers scramble to curb soaring inflation that has risen faster than wages and eroded the purchasing power of many households.
Economists at the Bank of England expect consumer price inflation to continue to climb for the remainder of the year, rising to just over 9 percent in the second quarter of 2022 before peaking at slightly over 10 percent in the final quarter of the year.
According to the Office for National Statistics (ONS), British workers suffered the biggest fall in their real pay for nearly nine years as a result of the rising cost of living.
According to ONS data released on April 12, regular pay excluding bonuses tumbled 1.8 percent in the three months to February 2022 when inflation is taken into account, as measured by the Consumer Price Index. It was the steepest fall since August to October 2013.
Tom Ozimek and PA Media contributed to this report.