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.
Price, base / as tested From Dh173,775 (base model)
Engine 2.0-litre 4cyl turbo, AWD
Power 249hp at 5,500rpm
Torque 365Nm at 1,300-4,500rpm
Gearbox Nine-speed auto
Fuel economy, combined 7.9L/100km
Profile
Co-founders of the company: Vilhelm Hedberg and Ravi Bhusari
Launch year: In 2016 ekar launched and signed an agreement with Etihad Airways in Abu Dhabi. In January 2017 ekar launched in Dubai in a partnership with the RTA.
Number of employees: Over 50
Financing stage: Series B currently being finalised
Investors: Series A - Audacia Capital
Sector of operation: Transport
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
Saudi Cup race day
Schedule in UAE time
5pm: Mohamed Yousuf Naghi Motors Cup (Turf), 5.35pm: 1351 Cup (T), 6.10pm: Longines Turf Handicap (T), 6.45pm: Obaiya Arabian Classic for Purebred Arabians (Dirt), 7.30pm: Jockey Club Handicap (D), 8.10pm: Samba Saudi Derby (D), 8.50pm: Saudia Sprint (D), 9.40pm: Saudi Cup (D)
Meatless Days
Sara Suleri, with an introduction by Kamila Shamsie
Penguin
UAE currency: the story behind the money in your pockets
What are the main cyber security threats?
Cyber crime - This includes fraud, impersonation, scams and deepfake technology, tactics that are increasingly targeting infrastructure and exploiting human vulnerabilities.
Cyber terrorism - Social media platforms are used to spread radical ideologies, misinformation and disinformation, often with the aim of disrupting critical infrastructure such as power grids.
Cyber warfare - Shaped by geopolitical tension, hostile actors seek to infiltrate and compromise national infrastructure, using one country’s systems as a springboard to launch attacks on others.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
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Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
Credit Score explained
What is a credit score?
In the UAE your credit score is a number generated by the Al Etihad Credit Bureau (AECB), which represents your credit worthiness – in other words, your risk of defaulting on any debt repayments. In this country, the number is between 300 and 900. A low score indicates a higher risk of default, while a high score indicates you are a lower risk.
Why is it important?
Financial institutions will use it to decide whether or not you are a credit risk. Those with better scores may also receive preferential interest rates or terms on products such as loans, credit cards and mortgages.
How is it calculated?
The AECB collects information on your payment behaviour from banks as well as utilitiy and telecoms providers.
How can I improve my score?
By paying your bills on time and not missing any repayments, particularly your loan, credit card and mortgage payments. It is also wise to limit the number of credit card and loan applications you make and to reduce your outstanding balances.
How do I know if my score is low or high?
By checking it. Visit one of AECB’s Customer Happiness Centres with an original and valid Emirates ID, passport copy and valid email address. Liv. customers can also access the score directly from the banking app.
How much does it cost?
A credit report costs Dh100 while a report with the score included costs Dh150. Those only wanting the credit score pay Dh60. VAT is payable on top.
