It has been reported in The Guardian that british consumers sharply cut their spending in January as the cost of living crisis damaged household finances, retailers have warned, amid growing concern over the impact of high inflation on the economy.
The British Retail Consortium (BRC) said sales growth slowed last month despite retailers offering steep discounts in the January sales, with households reining in their spending in the face of soaring costs for energy, food and other basic essentials.
Total sales rose by 4.2% in January compared with a year earlier, down from December’s annual growth rate of 6.9%. The BRC said much of the rise was a result of high inflation pushing up the value of goods being sold, masking weaker sales volumes.
The bleak consumer outlook was underlined on Monday with the news that all 170 of M&Co stores will close with the loss of 1,900 jobs after the Scottish retailer fell into administration before Christmas.
The clothing and homeware retailer’s brand has been bought by Peterborough-based AK Retail Holdings, the owner of the larger sizes brand Yours Clothing, Long Tall Sally and Bump It Up Maternity but the deal did not include M&Co’s physical stores.
The BRC said the coming months would be challenging for retailers and households, with inflation at the highest rates since the early 1980s and the economy on the brink of a prolonged recession. The annual rate of inflation fell back in December to 10.5%, down from a peak of just over 11% in October, although still remains at the highest level since 1982.
According to the latest monthly sales monitor from the BRC, clothing propped up spending on the high street in January, with men’s clothes and shoes the strongest performing category. Consumers also continued to spend on energy-efficient appliances, reflecting the soaring cost of gas and electricity.
However, much of the headline rise in spending was driven by higher inflation pushing up costs, with retailers warning that the volume of goods being purchased on the high street and online was falling compared with a year earlier.
Separate figures from Barclays showed consumer card spending grew 9.7% in January compared with the same month a year earlier, a period when concerns over the Covid Omicron variant led many people to stay way from the shops and hospitality venues.
Highlighting the rebound from the coronavirus pandemic, the snapshot showed a sharp increase in bookings for the travel sector as holidaymakers geared up for getaways later this year. Spending with travel agents and airlines rose by more than three-quarters compared with a year ago, while there was also an increase in spending on domestic holidays.
However, the figures showed an increase in spending on utilities, with a jump of 45% compared with a year ago as households raised their spending on gas and electricity to keep warm when the temperature dropped.
