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Consumers ‘curb’ their buying habits amid cost of living crisis

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Consumers have ‘curbed’ their shopping habits due to soaring costs of living, new data shows, as warnings intensify over essential bills.

The latest BRC-KPMG Retail Sales Monitor revealed that sales fell in April after a sharp drop in consumer confidence.

Separate figures from Barclaycard showed credit card spending was rising for essentials but slowing for retail and food as people tightened their belts.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The rising cost of living has shaken consumer confidence and dampened consumer spending.”

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Always so much shopping? Consumers have ‘curbed’ their shopping habits due to soaring cost of living, BRC-KPMG data reveals

Yesterday Chancellor Rishi Sunal hinted he could step in to help tackle the cost of living crisis, as warnings intensified of even greater pressure to come.

Former Bank of England chief economist Andy Haldane, now a government adviser, said inflation ‘has exceeded even my worst expectations’ and said the Bank should have acted sooner if rate hike.

A current member of the Monetary Policy Committee, Michael Saunders, said inflation could peak higher than the 10% forecast by the Bank.

Meanwhile, energy giant Scottish Power boss Keith Anderson told the BBC that the expected rise in average energy bills in the autumn to £2,500 to £3,000 a year could see many customers find it difficult to pay their bills.

Data from the BRC and KPMG revealed that total sales fell 0.3% in April, marking the first drop in 15 months.

On a like-for-like basis, UK retail sales fell 1.7% as shoppers cut back on big-ticket items.

Ms Dickinson added: “Sales growth has slowed since January, although the true extent of this decline has been masked by rising inflation.

“Big-ticket items have been hit the hardest as consumers curb spending on furniture, electrical appliances and other household items, compounded by delays on goods from China.

“Meanwhile, thanks to the April sunshine, gardening and fashion items saw stronger sales, particularly second-hand clothes as consumers geared up for the summer and wedding season this year. year.”

Sales of non-food items rose 6.9% in the three months to April, compared to the same period last year, due to higher inflation.

Total food sales for the three-month period fell 1.3%.

Fluctuations: A graph showing monthly growth in total UK retail sales, according to BRC-KPMG

Fluctuations: A graph showing monthly growth in total UK retail sales, according to BRC-KPMG

Paul Martin, head of UK retail at KPMG, said: ‘With interest rates and inflation rising and the Bank of England warning of a possible recession, the squeeze on disposable income of households is starting to have an impact on the main street.

“Amid declining consumer confidence, the retail industry has a tough time ahead as it faces mounting cost pressures from all directions.

“Many retailers will have no choice but to raise prices to protect their margins, but the longer we see high inflation and falling real household incomes, the more likely consumers are to change their behavior from consumption, leading to a deterioration in the health of the retail sector and possibly more casualties on the high street.

Customers turn to credit cards in times of crisis

Figures from Barclaycard showed consumer card spending rose 18.1% in April, compared to pre-pandemic figures for the same month in 2019.

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The data also pointed out that spending on essentials rose 17.4%, but this represents a slowdown from 18.1% in March due to reduced spending on fuel.

Despite the tough economy, spending on hotels, resorts and lodging jumped 16.6% from three years ago, the strongest growth in the category since September last year.

Takeout, nightlife and subscriptions all saw smaller increases than in March as higher prices drove changes in consumer behavior.

Jose Carvalho, head of consumer products at Barclaycard, said: ‘The impact of the rising cost of living on consumer spending is starting to be felt, with a number of categories – including subscriptions, takeaways and bars, pubs and clubs – seeing less growth than in March as Britons start to feel the pinch.

“However, the improvements seen by airlines and travel agents are particularly positive and hopefully point to a recovery in international travel spending later this year.”

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