Inflation bites into UK's post pandemic retail recovery
New data tracking the UK’s retail sales shows the high street is at its lowest growth since the pandemic.
Figures from BDO’s High Street Sales Tracker show like for like sales increased by 8.4 percent in June, the lowest since February 2021.
Footfall was down 10.5 percent in June compared to three years previously, with soaring inflation, political upheaval and increasing interest rates affecting consumer purchasing.
The news is not all bad, with the fashion sector recording a total sales growth of 15.2 percent, the 16th consecutive month of positive BDO figures.
Categories including homewear and lifestyle fell, with consumers holding back big ticket spending.
Current inflation is measured at 9.1 percent and is forecast to rise to 11 percent as the year progresses.
Sophie Michael, head of retail and wholesale at BDO, said: “These results confirm that the outlook for retailers is of concern. With consumer confidence at historically low levels, real wages falling to a 20-year low and interest rates set to rise further, there are few signs of encouragement for retailers.”
Sales of fashion have remained upbeat
“The fashion sector has undoubtedly been boosted by consumers refreshing their wardrobes for summer holidays. However, the weak sales growth for online retailers and the negative results for the homewares sector are key indicators that consumers are tightening their purse strings on discretionary spend and in particular on big ticket items.”
Data released by the British Retail Consortium (BRC) shows high street footfall was down 13.9 percent compared to June 2019, while shopping centre visits were down 24.1 percent.
BRC chief executive Helen Dickinson said: “Rising inflation, particularly soaring energy costs, is limiting customer spending power and damaging consumer confidence. This is only set to worsen in October as the energy price cap rises and the colder weather increases usage. With many people struggling, retailers are doing all they can to support their most vulnerable customers – from expanding value ranges to offering discounts to vulnerable groups, raising staff pay and investing in lower prices for the future.”