Consumer spending has been slowed by the UK’s rising cost of living and last month’s record spike in household energy bills. In April, total retail sales in the UK decreased by 0.3% as economic conditions worsened for consumers.
The British Retail Consortium (BRC) reports that total retail sales in the UK decreased by 0.3% in April as consumers tightened their purse strings. Big-ticket items, such as electronics, furniture, and homewares, were hit particularly hard as consumers were pushed to make tough choices in their spending.
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The reduction in total sales in the month of April reflected the overall slump in expenditure, compared to a three-month average growth rate of 3.2% and a 12-month rate of 6.4%, according to the Guardian.
Statistics from Barclaycard revealed increases in travel spending and overseas vacation bookings where April was the best month for international travel spending since before the pandemic, as UK travellers took advantage of the relaxed Covid restrictions to book overseas vacations.
Consumer spending increased 18.1% in April, according to the credit provider, which processes roughly half of all card transactions, as airlines and travel agencies had their greatest month since the pandemic began two years ago.
Spending on hotels, resorts, and accommodations increased 16.6% in April compared to 2021, the largest increase since September last year, reflecting the rush for booking holidays during the long weekend and for summer.
However, due to a tiny fall in gas usage, expenditure on basics climbed by a fraction less than in March, indicating that UK consumers are looking for ways to save money on fuel and groceries according to Barclaycard.
In April, average utility spending per customer increased 28.8%, while Barclaycard reported that 9 out of 10 customers were concerned about the impact of growing home costs on their finances.
Food sales declined 1.3% in the three months to April, according to the BRC, compared to a 12-month average growth rate of 0.7%.
BRC also added that the April heatwave boosted sales of fashion and garden goods, as well as clothing for special occasions like weddings.
However, even though clothing and footwear sales increased, consumers cut back on non-essential purchases, with technology and home goods bearing the brunt of the reduction.
The Bank of England has warned of mounting danger of a recession, with inflation on course to peak above 10% later this year.
Russ Mould, Investment Director, AJ Bell said, “The latest BRC-KPMG Retail Sales Monitor shows what everyone has been thinking – that the rising cost of living would force people to cut back on their spending. Big ticket items like furniture and electrical goods have been the first place to suffer as it’s pretty easy to decide not to spend £1,000 on a new sofa when money is tight.”
“A decent bout of weather in April helped to keep some sales ticking over, such as garden goods and new clothes to wear out in the sun. But even these treats could fall foul of the cost-of-living squeeze in time.”
“The outlook for retailers is bleak and they either have to cut prices to keep volumes ticking over, which will hurt profit margins; or they hunker down and accept that life will be hard near-term and so it’s all about keeping a lid on costs.”