Consumer spending hits five-month slump in September

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September sales suffered from a “summer hangover” according to the latest results from the British Retail Consortium (BRC) and KPMG sales monitor.

UK retail sales fell 0.2 per cent in September compared with the same period a year before, when they had risen 1.9 per cent year-on-year.

On a total basis, sales rose 0.7 per cent in September, against an increase of 2.3 per cent in September 2017. The sales monitor pointed out that this was the lowest rise since last October, excluding Easter distortions.

In the three months to September, in-store sales of non-food items fell 2.7 per cent on a total basis and four per cent on a like-for-like basis. 

Across the same period, food sales were up 2.3 per cent on a like-for-like basis and 3.4 per cent on a total basis.

Online sales of non-food products rose 5.4 per cent in September, against impressive growth of 10.7 per cent in September 2017, and achieving the lowest growth since January, well below the three month and 12 month respective averages of 6.7 per cent and 7.1 per cent.

“These figures lay bare the difficult operating environment for the retail industry. After a challenging August, constrained consumer spending in September has resulted in the weakest sales growth for five months,” said BRC chief executive Helen Dickinson.

As part of the BRC’s long-running campaign to tackle decline on the high street, Dickinson pointed again to the rate of business tax retailers are faced with as a major cause for the declining figures.

“The retail industry pays a disproportionate amount of tax,” she added.

“It represents 5% of the economy but pays 10% of business tax and almost 25% of business rates. A tax system skewed towards high taxes on people and property is contributing to stores closures and job losses and is stalling the successful reinvention of our high streets.”

Meanwhile KPMG UK head of retail Paul Martin suggested the determination of British consumers had felt to establish ‘business as usual’ with the onset of Brexit had come to an end.

“Like-for-like retail sales in September were down 0.2 per cent on this time last year, but then last year consumers were remaining more defiant in the face of Brexit and shopping regardless,” Martin said.

“The final golden quarter of the year marks the ultimate test for many players, but retailers must also successfully navigate: the upcoming government Budget, Black Friday, Christmas, and of course Brexit.”

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