Yahoo Finance Cost of living: Rising prices slow UK shopping spend
The rising cost of living in the UK has put the brakes on retail sales in April as consumers reigned in spending on furniture, electricals and other homeware items.
Analysis from the British Retail Consortium (BRC) and KPMG published on Tuesday show sales decreased by 0.3% last month, compared with an increase of 51.1% in April 2021. This was below the three-month average growth of 3.2% and the 12-month average growth of 6.4%.
Sales fell 1.7% on a like-for-like basis from April last year, when they rose 39.6%. BRC said this was below the three-month average growth of 0.1% and the 12-month average of 3.3%.
Food sales declined 1.8% on a like-for-like basis and 1.3% on a total basis in the quarter to April.
In-store sales of non-food items grew 59.3% overall and 45.8% on a like-for-like basis, up on the total 12-month average growth of 50.2%. Online non-food sales fell 13.9% in the time period, compared with growth of 11.3% in April 2021, better than the three-month decline of 24.1%.
UK retail sales growth went into reverse for the first time in 15 months since the pandemic impacted consumer spending as stores were forced to shut multiple times during lockdown.
"The rising cost of living has crushed consumer confidence and put the brakes on consumer spending," said Helen Dickinson OBE, CEO of the BRC. "Sales growth has been slowing since January, though the real extent of this decline has been masked by rising inflation."
Read more: Is the UK heading into a recession?
Experts have warned consumers face a challenging time ahead as the Bank of England predicts inflation to hit 10% by the end of the year.
On Thursday, Threadneedle Street hiked UK interest rates to a 13-year high of 1% to curb soaring inflation, which analysts say could force retailers to hike prices.
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.
"Many retailers will have no choice but to raise prices to protect margins, but the longer we see high inflation and real household incomes falling, the more likely it is that consumers will change their spending behaviour, prompting a decline in the health of the retail sector and possibly more casualties on the high street."
