Shoppers failed to provide much-needed support to the UK economy in August, with retail sales volume falling as uncertainties weighed on people’s purchasing decisions, sector data showed.

Retail sales were flat in August compared with the same month last year, according to figures compiled by advisory services firm KPMG with the British Retail Consortium, an industry body. The reading is the second worst August performance since records began in 1995 after a reduction in 2016, and it means there was a contraction after adjusting for price changes. 

“August proved to be yet another incredibly disappointing month for retail,” said Paul Martin, UK head of retail at KPMG. “It’s clear that for much of the retail market, efforts are being focused on preservation, not growth, in this adverse and uncertain climate.” 

Separate data from Barclaycard, which the payments company said included nearly half of the nation’s credit and debit card transactions, and spending for pubs and restaurants showed that consumer spending had risen 1.3 per cent in August, compared with the same month last year. The figure is down from a 4.5 per cent annual expansion in August 2018 and also represented a decline in real terms after accounting for inflation.

The lack of spending growth in August is in contrast to near-record high employment rates and accelerating earnings growth, which mean more money in shoppers’ pockets.

However, consumer confidence deteriorated in August, according to data from the European Commission released last week, weighing on purchasing decisions.

In August, more than half of UK shoppers said they were worried about the impact of rising prices, according to a survey by Barclaycard. More than one in three said they were planning to reduce their spending as a result of higher inflation. 

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“August’s figures signal the end of a fairly subdued summer for consumer spending — showing a marked contrast to the previous August,” said Esme Harwood, director at Barclaycard. “A weak pound and worries about rising prices are causing concern for many, with Brits looking to better balance their household budgets.” 

The restrained spending was fairly broad-based, according to Barclaycard, with the exception of pubs and restaurants that reported strong expansion. BRC data showed non-food sales being the biggest drag on growth.

“Greater economic and political uncertainty has driven down consumer demand,” said Helen Dickinson, BRC chief executive. “While the summer weather gave a small boost to food sales, this was cancelled out by a drop in non-food sales.” 

Similar data underestimated official figures in July, when ONS sales figures were boosted by Amazon’s Prime day, when the internet giant sold goods at discount prices.

However, a deterioration across a variety of indicators — including retailer sentiment falling to the lowest level since 2009, according to data released last week by the European Commission — suggests shoppers have failed to support economic growth in August.

Barclaycard and BRC data came the day after a purchasing managers’ index showed a deterioration in manufacturing activity

Consumer spending was the strongest gross domestic product component in the second quarter, recording a 0.5 per cent expansion in contrast with a 0.2 contraction of the overall economy.



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