Sales in the UK’s retail sector fell by more than expected last month, as shoppers continue to tighten their belts amid soaring prices. Data from the Office for National Statistics showed a decline of 1.6% in August.
It builds on a downward trend that started around a year ago when restrictions on hospitality businesses were lifted. Experts had expected a fall of just 0.5%, according to a consensus supplied by Pantheon Macroeconomics.
The ONS said that food shops, non-food shops, online retailers and fuel sellers had all registered declines in August – the first time since July 2021. Non-store retailers – largely the online sellers – saw volumes drop by 2.6% in August, giving back some of the ground they gained during the pandemic. But sales in the sector are still a quarter higher than before lockdowns.
Lynda Petherick, retail lead at consultancy Accenture, said that retailers will be worried about the figures from the unusually warm August.
She told PA: "With a difficult winter to come, it will come as a worry to retailers that shoppers have already reined in their spending despite the hot summer. The sombre atmosphere in the UK this week and news of slow economic growth will be adding to the sense of concern among retailers as the weather gets colder.
“Rising costs remain front of mind, and brands will be doing all they can to minimise outgoings and protect their margins for the months ahead.”
Pantheon Macroeconomics expert Samuel Tombs said it doubted that the extra bank holiday for the Queen's funeral - and associated shop closures - would hit retail sales in September. He said: “People simply will shop online or visit shops later in the month instead.”
He added: “Moreover, the Government’s decision to freeze consumer electricity and natural gas prices for the next two years at 27% above their current level, should foster an improvement in consumers’ confidence and a partial recovery in households’ real disposable incomes over the coming quarters. Accordingly, we expect August’s retail sales figures to be this year’s nadir and a consumer-led recession to be narrowly avoided this winter."
