Retail sales in the UK have dropped at a rate “not seen since the depth of the pandemic” as rampant inflation forces consumers to slash discretionary spending, a report has found.
As households reined in spending, total retail sales dropped by 1 per cent in June — the third fall in a row as the cost of living takes its toll on consumers, the British Retail Consortium said
Many shoppers downgraded to cheaper brands or cut items from their grocery lists completely, the report by the BRC and KPMG consultancy found.
The trade association’s measure of retail sales declined by 1.3 per cent from a year ago in the period through to July 2. This followed a 1.5 per cent drop the month before.
“Sales volumes are falling to a rate not seen since the depths of the pandemic,” Helen Dickinson, chief executive of the BRC, said.
Almost half of consumers have begun to reduce energy and water consumption to cope with rising bills.
Utility costs have soared 40 per cent from a year ago, according to Barclaycard, which published a separate report. That means less money for other items.
Even a boost from the queen’s platinum jubilee celebrations failed to offset the slowdown in spending.
“Discretionary purchases were hit hard, especially white goods and homeware, while consumers also traded down to cheaper brands in food and non-food alike,” Ms Dickinson said.
“While the jubilee weekend gave food sales a temporary boost, and fashion sales benefited from the summer holiday and wedding season, this was not enough to counter the substantial slowdown in consumer spending.”
Inflation has already hit a 40-year high of 9.1 per cent and is set to soar past 11 per cent in the autumn, as the energy price cap is set to be increased once more.
The BRC is calling on the government to help the retail sector by taking action to lower business rates as firms face being “caught between significant rising costs in their supply chains and protecting their customers from price rises”.
The sales monitor data showed non-food retail sales have suffered the most amid the cutback on discretionary spending, down 3.3% on a total basis in the three months to June and 4.2% lower on a like-for-like basis.
Barclaycard, which manages about a third of the credit and debit card purchases in the UK, said spending in supermarkets fell 0.8 per cent from a year earlier while outlays on essentials increased by 4.4 per cent. It found spending on non-essentials slowed sharply.
“The outlook continues to be challenging, although good weather might provide a welcome boost in July,” said Susan Barratt, chief executive of research company IDG, which contributed to the survey. “We’re forecasting that food inflation will reach 15 per cent this summer.”
Gabriella Dickens, senior UK economist at research consultancy Pantheon Macroeconomics, said that while the immediate picture shows belt tightening, consumer spending should strengthen later this year.
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
MADAME%20WEB
%3Cp%3EDirector%3A%20S.J.%20Clarkson%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Dakota%20Johnson%2C%20Tahar%20Rahim%2C%20Sydney%20Sweeney%3C%2Fp%3E%0A%3Cp%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
England's all-time record goalscorers:
Wayne Rooney 53
Bobby Charlton 49
Gary Lineker 48
Jimmy Greaves 44
Michael Owen 40
Tom Finney 30
Nat Lofthouse 30
Alan Shearer 30
Viv Woodward 29
Frank Lampard 29
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
Results
1. New Zealand Daniel Meech – Fine (name of horse), Richard Gardner – Calisto, Bruce Goodin - Backatorps Danny V, Samantha McIntosh – Check In. Team total First round: 200.22; Second round: 201.75 – Penalties 12 (jump-off 40.16 seconds) Prize €64,000
2. Ireland Cameron Hanley – Aiyetoro, David Simpson – Keoki, Paul Kennedy – Cartown Danger Mouse, Shane Breen – Laith. Team total 200.25/202.84 – P 12 (jump-off 51.79 – P17) Prize €40,000
3. Italy Luca Maria Moneta – Connery, Luca Coata – Crandessa, Simone Coata – Dardonge, Natale Chiaudani – Almero. Team total 130.82/198.-4 – P20. Prize €32,000
