Britain’s biggest retailers have warned shoppers will be forced to “tighten their purse strings” amid increasing living costs in the coming months.
The British Retail Consortium said rising household energy prices and food inflation were going to take a serious toll on consumer spending this spring.
“Retailers face competition from other spending opportunities as the public flood back to restaurants, cafés and live events,” said BRC CEO Helen Dickinson. “Furthermore, rising inflation, driven by higher costs of production, higher energy and transport prices, as well as other looming price hikes this spring will mean consumers will have to tighten their purse strings.”
The BRC’s comments came after NielsenIQ data showed total till sales at UK supermarkets fell 2.9% in the four weeks to 29 January.
However, the numbers faced tough year-on-year comparisons as sales were up 10.6% last year, when the country was in the midst of a Covid-19 lockdown.
The BRC-KMPG Retail Sales Monitor has also found that total retail sales increased by 11.9% in January versus the same period last year.
But KPMG UK head of retail Paul Martin said macroeconomic conditions could result in a “challenging few months ahead” for retail as shoppers could start cutting back on spending.
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“Retailers are facing their own inflationary pressures and will need to take tough decisions on whether and how to pass on the increase costs they have been sitting on for some time to consumers facing their own financial challenges,” he added.
“We could easily see the health of the sector start to deteriorate if consumers choose to sit on savings to weather the storm.”
Earlier this year, exclusive research by The Grocer showed that almost 10,000 products shot up in price over the new year – meaning 6% of all supermarket products became more expensive between 27 December and 5 January.
IGD’s latest ShopperVista data showed that 89% of shoppers expected food to become expensive this year, with shopper confidence in January plummeting to the lowest levels ever recorded by IGD’s Shopper Confidence Index. Additionally, 39% stated they expected to be worse off in January 2022 – up 8% from last month.
Food activist Jack Monroe recently accused supermarkets of passing on inflation costs to the poorest and most vulnerable households. And Iceland’s MD Richard Walker went so far as to say that the supermarket was “losing customers to food banks”.
“We can expect more shoppers to increasingly focus on tightening their spending in the months ahead,” IGD CEO Susan Barratt confirmed.
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