UK retail sales growth slows - BRC
By Abigail Townsend
Date: Tuesday 06 Sep 2022
(Sharecast News) - UK retail sales growth slowed in August, industry research showed on Tuesday, as the surging cost of living continued to bite.
According to the latest BRC-KPMG Retail Sales Monitor, sales rose by 0.5% on a like-for-like basis compared to August 2021, down from growth of 1.6% seen in July. Underlying sales rose by 1.5% in August 2021.
Total sales values rose by 1%, from 2.3% in July. Total sales rose by 3.0% in 2021.
In the three months to August, food sales rose by 3.8% or by 3.3% on a like-for-like basis, above the 12-month total average of growth of 0.8%.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The drop in the year-over-year growth rate of total sales in August is a bad result, giving that sales were falling from a year ago from their post-lockdown highs.
"After seasonally-adjusting and deflating the data, we judge that the BRC's figures are consistent with around a 2% month-to-month drop in the official measure of the retail sales volumes in August.
"This drop makes sense, given the record low level of consumers' confidence."
Looking ahead, Tombs said the outlook for retail sales depended on what measures the government was likely to announce in the coming days to help households with soaring energy prices.
But he warned: "A consumer-led recession this winter still can be avoided, if consumers' energy bills are frozen and businesses receive enough support too, but the risk that the government support package falls short is high."
Don Williams, retail partner at KPMG, said the heatwave had seen strong growth for items such as suntan lotion and food for barbeques. But clothing sales - one of the most robustly-performing categories so far this year - reported a "significant fall".
He continued: "As consumers return from summer holidays to an 80% increase in the energy price cap, double digital inflation and Christmas just three pay cheques away, the brakes could be firmly applied on non-essential spending for most UK households.
"The storm clouds are closing in as retailers brace themselves for a fall in demand - at a time when their own margins are under pressure from rising costs."
Helen Dickinson, chief executive of the British Retail Consortium, said: "While inflation in retail prices is lower than general inflation at over 10%, this still represents a significant drop in sales volumes.
"With some predictions of inflation reaching 20% in the new year, households and retailers are preparing for a particularly tough time ahead."
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