It Looks Like Britain’s Brushing Up On Spending

It Looks Like Britain’s Brushing Up On Spending
Daniel Johnston

6 months ago2 mins

What’s going on here?

UK consumer spending data painted a rosy picture for August – but scratch the surface and some darker spots appear.

What does this mean?

Official data isn’t due out until later this month, but the British Retail Consortium’s figures normally work as a kind of crystal ball for retail sales. And if these numbers are right, then this August was actually a bit of a party. Sales shot up by 4.1% from the same time last year, outpacing the three-month average and making July’s 1.5% growth look like small change. Experts think a boost in consumer confidence meant sectors like health, beauty, and snacks had a field day, soaking up those rare British summer rays. But it wasn’t all sunshine and rainbows: clothing and footwear felt a cold breeze, and online sales – well, they've seen better days.

UK retail sales

Why should I care?

The bigger picture: Inflation’s deflating hopes.

On the face of it, those figures seem positive, sure – but let’s not forget that they don’t account for inflation. So with the rate of price rises growing by more in July than sales grew in August, consumers are probably still shelling out more for less. And to muddy the waters further, Barclays’ consumer spending data, factoring in almost half of UK card transactions, shows a spending growth slowdown in August. So while some of these numbers look A-OK, the British retail sector (and the economy it supports) is essentially still on a knife edge.

Online sales fell

Zooming out: Festive or festering.

The coming festive season is shaping up to be a make-or-break moment for retailers. With the chill of high interest rates and winter energy bills looming, they’re crossing their fingers for consumers to keep the holiday spirit (and spending) alive. Otherwise, more names might join the unfortunate ranks of those who’ve folded in the past year – like budget-friendly Wilko and chic homeware haven Cath Kidston.

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