Consumer Confidence Affects Retail Sales

Weaker consumer confidence means that UK retail spending is on a downward tend as the peak Christmas shopping season approaches. The BRC/KPMG sales monitor for October shows a year-on-year increase in UK retail sales of 0.5 per cent on a like-for-like basis, with total growth of 3 per cent.

However, the three-month trend show the growth rate down to 1.1 per cent in October from 1.5 per cent in September on a like-for-like basis, with total sales down to 3.7 per cent from 4.1 per cent.

The survey found that October started well, especially for clothing and footwear retailers, but trade slowed in the second half, picking up only slightly at the end of the month. Consumer confidence remains weak, with shoppers wary about making big-ticket purchases and becoming more cautious about splashing out on non-essentials.

Kevin Hawkins, director general, of the BRC, said: "There is no escaping that the High Street trading environment is tough in the run up to Christmas. Sales growth hit its lowest level for 2004 in October, reflecting the underlying trend of weakening consumer demand that we have seen over recent months. Consumer concerns over the economy, pensions and housing market have combined with interest rate rises to erase their confidence.

"Growth is fragile and more vulnerable to economic bad news than it has been for a couple of years. However, some of the more downbeat predictions we've seen in the press of late could be premature. October often sees the shopper pause for breath before Christmas trading really starts. It could still go either way "

Amanda Aldridge, head of retail at KPMG, said: "This is exactly what UK retail did not want to see - disappointing figures for our High Street retailers at the start of the run-up to the all important Christmas trading period. The fact that the slowdown is across the board suggests that maybe consumer confidence has finally started to falter and that this is the start of a worrying downward trend."