Retail sales are falling at a rate “not seen since the depths of the pandemic” as price hikes hit household budgets, a UK retail organization has said.
Shoppers are cutting back on appliances like fridges and dishwashers, opting for cheaper brands, the British Retail Consortium added.
In-store and online sales have fallen for three straight months, figures from the BRC and auditor KPMG show.
Prices in the UK are currently rising at their highest rate in 40 years.
Inflation – the rate at which prices are rising – hit 9.1% in May, with rising costs for food, utility bills and fuel putting pressure on household finances.
Paul Martin, UK retail director at KPMG, said people were cutting back on spending “against a backdrop of unprecedented price hikes on the high street”.
He said online shopping continued to decline, with overall sales down 9%. The biggest declines were in purchases of furniture, household appliances and computers.
Helen Dickinson, Chief Executive of the BRC said: “During the anniversary [bank holiday] The weekend gave a temporary boost to food sales and fashion sales benefited from the summer holiday and wedding season, not enough to offset the sharp slowdown in consumer spending.
- Shoppers rein in spending as incomes fall
Total revenue fell 1% in the five weeks between May 29 and July 2, 2022, compared to a 10.4% increase in June 2021, figures from BRC and KPMG show. Declines followed in April and May.
Grocery inflation could hit 15% this summer, according to forecasts by the Institute of Grocery Distribution (IGD), meaning shoppers will pay more for their essential groceries.
IGD Managing Director Susan Barratt said: “Shopping habits are changing; around 60% of shoppers are now spending time saving money – up from 55% in March.”
“With record-breaking gas prices, walking to a grocery store is also becoming more important,” she added, “with 27% of shoppers agreeing it’s a factor in their purchasing decision, up from 24% in May.”
The cut in spending on home appliances reported in the BRC survey comes just days after online electronics retailer AO World said it would raise around £40m.
The company’s share price had fallen after reports that credit insurer Atradius had stopped providing cover for the company’s suppliers.
Without credit insurance, suppliers often demand upfront payments in the event the company they’re selling to collapses and can’t pay its bill.
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