Both the value and the volume of sales in the UK’s retail sector dropped last month for the first time since the end of 2021, as shoppers tighten their belts in the face of soaring prices.
The Office for National Statistics (ONS) stated that sales volumes declined by 1.6% in August, higher than the 0.5% expected, building on a downward trend that started around a year ago when Covid-19 restrictions were lifted for the hospitality sector.
Since then volumes have fallen as people switch from buying beer and food in shops to going to local pubs or restaurants, for example.
But the amount that people spent at retailers rose by 8% between July 2021 and July this year. Then in August, this dropped by 1.7% from the month before.
The ONS said that food shops, non-food shops, online retailers and fuel sellers had all registered declines in August – the first time since July 2021.
Non-store retailers - largely the online sellers - saw volumes drop by 2.6% in August, giving back some of the ground they gained during the pandemic. But sales in the sector are still a quarter higher than before lockdowns.
Lynda Petherick, retail lead at consultancy Accenture, said that retailers will be worried about the figures from the unusually warm August. “With a difficult winter to come, it will come as a worry to retailers that shoppers have already reined in their spending despite the hot summer.
“The sombre atmosphere in the UK this week and news of slow economic growth will be adding to the sense of concern among retailers as the weather gets colder.
“Rising costs remain front of mind, and brands will be doing all they can to minimise outgoings and protect their margins for the months ahead.”
But Pantheon Macroeconomics' UK chief economist Samuel Tombs sounded a more positive note, saying August’s figures will be this year’s “nadir” and that the mourning period and funeral bank holiday won't materially dampen retail sales in September.
“Moreover, the government’s decision to freeze consumer electricity and natural gas prices for the next two years at 27% above their current level, should foster an improvement in consumers’ confidence and a partial recovery in households’ real disposable incomes over the coming quarters.”
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
