Financial institution holidays fail to spice up gross sales progress amid ongoing inflation worries
M
ay’s trio of financial institution holidays didn’t get customers spending as gross sales progress slowed to its lowest stage in six months, newest figures present.
Total UK retail gross sales elevated by 3.9% final month, towards a decline of 1.1% in May 2022 and beneath the three-month common progress of 4.7%, in keeping with the BRC-KPMG Retail Sales Monitor.
Food gross sales have been up 9.6% on a 12 months in the past, boosted by the coronation however nonetheless not sustained throughout the month.
Meanwhile, progress in discretionary spending continued to tumble because the excessive price of dwelling squeezed households.
The gloom continued for on-line retailers with simply 4 classes registering optimistic gross sales figures and complete gross sales down by 3%.
There was trigger for some optimism, nevertheless, as brighter climate on the finish of the month led to a much-needed pick-up in summer season vogue gross sales, in addition to gardening and DIY merchandise.
British Retail Consortium chief government Helen Dickinson mentioned: “With consumer confidence still recovering from record depths, and continued tightening of household incomes, we are unlikely to see substantial sales growth in the coming months.
“But, with signs that inflation has possibly peaked, retailers are hopeful that confidence will continue to improve.”
Paul Martin, UK head of retail at KPMG, mentioned: “Despite warmer weather, a national celebration and month of bank holidays, retailers saw pretty mild growth in May with sales figures up just 3.9% on last year, and lower than the 5% growth seen in April.
“Retailers will be hoping that inflation levels in the wider economy continue to move in the right direction in order to boost much-needed consumer confidence.
“The wild card for the retail sector remains uncontrollable food inflation, which shows little sign of coming down in the near future, and this is having a significant knock-on effect on non-essential spending.”
Consumers are nonetheless paying shut consideration to their on a regular basis spending, and we’re seeing rising issues round ‘shrinkflation’ within the weekly store
Separate figures from Barclays present shopper card spending grew simply 3.6% year-on-year in May, down from April’s 4.3%, as Britons reduce on discretionary purchases to deal with mounting inflation and meals costs.
However, May’s lengthy financial institution vacation weekends offered a welcome uplift to pubs, bars and golf equipment and the leisure sector, whereas each digital content material and takeaways loved their highest progress to this point this 12 months.
Aside from the near-record 19.1% meals inflation, Barclays additionally discovered that grocery spending obtained a lift from the coronation financial institution vacation weekend and Eurovision.
Spending on gasoline noticed its third consecutive month of decline, down 10.7% on final May, largely due to the drop in costs.
Amid ongoing issues round rising meals costs, Barclays discovered that 65% of customers have seen that some merchandise are actually being bought in smaller bundle or portion sizes whereas costing the identical or greater than earlier than.
The merchandise most incessantly cited as being impacted by ‘shrinkflation’ are chocolate, crisps, biscuits and snack bars.
In response, a fifth of shoppers (20%) are switching away from merchandise which have been downsized by producers in favour of shopping for merchandise in bulk which supply higher worth for cash.
Esme Harwood, director at Barclays, mentioned: “Consumers are still paying close attention to their everyday spending, and we are seeing growing concerns around ‘shrinkflation’ in the weekly shop.
“Many are having to forgo discretionary purchases to offset rising food prices, with clothing and restaurants most impacted.
“However, the growth witnessed at pubs, airlines and entertainment venues shows that Brits are still finding room in the budget to enjoy nights out and holidays.”