Yahoo Finance UK retail sales jump on the back of price inflation but shoppers rein in spending
UK retail sales jumped last month on the back of price inflation while sales volumes continued to shrink as consumers tighten their purse strings, according to new analysis.
Figures from the latest BRC-KPMG retail sales monitor for September revealed that price rises offset a decrease in transactions by shoppers over the month.
Total retail sales rose by 2.2% last month, up from the 1% growth recorded in August.
They were up 1.8% on a like-for-like basis from September 2021, when they fell by 0.6%.
Food sales grew 4.6% in the quarter to September, versus the same period last year, the data showed.
"Consumer confidence remains low, and retailers are having to tread a very fine line between protecting their own margins and further denting confidence by passing on price rises," Paul Martin, UK head of retail at KPMG said.
Read more: UK high street recovery slows amid cost of living struggles
Helen Dickinson OBE, chief executive of the British Retail Consortium, said: "While UK retail sales grew in September, this represented another month of falling sales volumes given high levels of inflation.
"As consumer confidence continued to fall, people shopped cautiously, avoiding large ticket items such as new computers, TVs and furniture.
"Many households are also preparing for higher energy costs this winter, with blankets, warm clothing, and energy-efficient appliances, such as air dryers and air fryers, all selling well."
Separate spending data from Barclaycard reported an increase in sales but highlighted growth slowed further as consumer spending was further strangled by the surge in the cost of living.
The credit card operator found that consumer card spending was 1.8% higher in September, but this represented the weakest uplift since February 2021.
Barclaycard also highlighted that essential spending grew by the smallest level so far this year, at 3.3%, as shoppers assess their budgets.
Read more: Firms in England and Wales collapse at the fastest pace since 2009 as energy costs bite
That growth was largely due to supermarkets only seeing a small uplift, at 2.8%, while food and drink specialist stores declined.
"Energy price increases are understandably causing concern for Brits, as they worry whether they will have enough money to cover their household bills," Esme Harwood, director at Barclaycard said.
"Consumers are taking a savvy approach to budgeting as they reduce spending on discretionary items and seek more value in their weekly shop, which is having a knock-on effect on retail and hospitality sectors."
Meanwhile, Springboard’s weekly footfall data showed that footfall has dropped by more than -2% in parts of the UK, as households feel the pressure of rising energy costs. Seven of the 10 regions tracked by Springboard saw declining footfall last week.
"It may be a little premature to draw definitive conclusions; however, the comprehensive drop in footfall across nearly all parts of the UK may well be an initial indicator of the impact on consumers of higher energy costs that came into effect on 1 October," Diane Wehrle, insights director at Springboard said.
Read more: UK consumer confidence hits record low as cost of living bites
Another analysis showed UK consumer confidence slumped to a record low in September amid deep concerns about personal finances and the economy over next 12 months.
According to GfK’s consumer confidence barometer, the index decreased by five points last month to -49 — the worst overall score since records began in 1974.
