Figures released on Tuesday showed that while retail sales in the UK last month had increased, thanks largely to Christmas promotions and the World Cup, soaring inflation indicated consumers were paying more and getting less.
The British Retail Consortium (BRC) said the value of spending in shops rose by 4.1 per cent last month, the highest since January. The figure was up from 1.2 per cent in October. But the increase in value was less than half the rate of inflation, which in October was running at 11.1 per cent.
"Sales picked up as Black Friday discounting marked the beginning of the festive shopping season. However, sales growth remained far below current inflation, suggesting volumes continued to be down on last year," said BRC chief executive, Helen Dickinson.
On the cards
Elsewhere, Barclaycard said customers spent 3.9 per cent more on its credit and debit cards in October, far below the inflation figure, itself the highest in 41 years.
About 94 per cent of people in Britain surveyed by Barclaycard said they were concerned about the impact of increasing energy bills on their household finances.
"Cut-backs are affecting non-essential spending on clothing, department stores and restaurants," said Esme Harwood, director at Barclaycard. "Many Brits intend to reduce festive spending on presents and parties in an effort to save money."
What worries retailers is that as the cost-of-living crisis hits their pockets, UK consumers will spend more on essentials such as energy and food and far less on other goods.
"For some struggling retailers hit hard as consumer confidence and spending declines, and costs continue to rise, the next few weeks could be critical to their survival," said Paul Martin, UK head of retail at KPMG. "Retailers are well aware that in the current environment it is a battle to attract and retain every customer.
"Given the economic headwinds for the year ahead, with consumer behaviour expected to evolve further as shoppers look to trade down and purchase less, understanding and meeting customer needs will be mission critical for retailers, and it’s a job that keeps getting harder."
As consumer spending suffers its worse squeeze in decades, the UK's retailers look set for a bumpy festive season. However, BRC chief executive, Helen Dickinson says it's too early to write off Christmas shopping just yet.
"The cost-of-living crisis means many families might dial back their festive plans," she said. "Yet, with three weeks to go, there is still plenty of time for the Christmas cheer to bring sales home this Christmas,” she said.
