No respite with high street poised for more deterioration

High street retailers’ spirits are set to sink even lower in the third quarter, as it continues to face “relentless” cost pressures, according to new data.

KPMG and Ipsos’ quarterly Retail Health Index indicates that the health of the high street held steady at 79 points, with predictions it will drop one point in the third quarter.

The health rating for the second quarter is already lower than the 81 points recorded in the second quarter of 2017 and 83 points in the same 2016 period.

The index based on a quantitative assessment of demand for retail goods and services and margins and costs in the industry, and follows the Bank of England’s scoring system on economic intelligence provided to its interest rate-setting committee.

“While the health of the high street is far from where we’d like it to be, when you consider the scale of the challenges UK retailers are facing, the second quarter delivered stronger overall demand than we had anticipated,” Ipsos Retail Performance retail intelligence director Tim Denison said.

“This mollified the impact of the rising national living wage and automatic pension enrolment contributions.

“But it has been a case of exceptions rather than fundamentals that has helped to ease the way.

“With political and economic storm clouds building, the final quarter of this year in particular looks set to be tough.”

KPMG head of retail Paul Martin added that cost pressures in the retail sector were “relentless”.

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