High street under pressure as inflation bites - BRC

Sales volumes continued to fall in September, according to industry research published on Tuesday, as weakening consumer confidence weighed heavily on spending.

According to the BRC-KPMG Retail Sales Monitor, total sales rose by 2.2% in September, against an increase of 0.6% a year previously and above the three-month average of 1.9%. On a like-for-like basis, sales rose 1.8% year-on-year.

However, the monitor is not adjusted for inflation, which is currently at a near-40 year high of 9.9%. The British Retail Consortium said that as a result, "the small rise in sales masked a much larger drop in volumes once inflation is accounted for".

Helen Dickinson, chief executive, added: "While UK retail sales grew in September, this represented another month of falling sales volumes, given high levels of inflation.

"As consumer confidence continued to fall, people shopped cautiously, avoiding big-ticket items such as new computers, TVs and furniture."

Over the three months to September, food sales increased 4.2%, while non-food sales fell 1.1%, both on an underlying basis.

In-store sales of non-food items increased 1.1% over the quarter, well below the 12-month average of 33.3%. Some of the most in-demand items include blankets, warm clothing and air dryers, as householders prepared for soaring energy bills this winter.

Dickinson added: "A difficult winter looms for both retailers and consumers. Costs are increasing throughout retailers’ supply chains, the pound remains weak, interest rates are rising and a tight labour market is pushing up the cost of hiring.

"All of this is making it harder for retailers to reduce prices and help struggling households."

Paul Martin, UK head of retail at KPMG, said: "Retail sales remained positive in September, but much of this will be attributed to increased prices as volume of sales continue to be challenging.

"Once again, clothing and footwear came to the rescue of the high street, and back to school purchasing was a driver in retail growth figures.

"With interest rates, inflation, labour, energy, and costs of goods continuing to climb, retailers are heading into one of the most challenging Christmas shopping periods they have had to deal with in years."