UK consumer spending grew at about half the pace of inflation in April as fast-rising prices continued to suppress demand, even as the leisure sector saw some “renewed momentum”, according to new sector data.
The value of retail sales increased 5.2 per cent in the year to April, according to figures compiled by KPMG and published on Tuesday by the British Retail Consortium trade body. This compares with March’s headline inflation figure of 10.1 per cent.
Helen Dickinson, chief executive at the BRC, said that inflation had kept “volumes . . . down for both food and non-food as customers continued to adjust spending habits”.
Shoppers have been spending more in stores while getting less since prices started surging in 2021. In March, sales values were up 16 per cent from February 2020, before the pandemic, while volumes were down 0.8 per cent, according to the latest official data.
Paul Martin, head of retail at KPMG, said that retailers would be hoping that the coronation of King Charles III, the three bank holidays in May and signs that inflationary pressures were easing would boost consumer confidence significantly “enough to start to see real, profitable growth”.
The BRC figures chime with consumer spending data tracked by Barclays, the payments company, which monitors almost half of all UK credit and debit card transactions.
Those figures, which unlike the BRC data includes services such as restaurants and bars, showed spending rose 4.3 per cent last month.
Abbas Khan, UK economist at Barclays, said that while high inflation continues to squeeze real household disposable incomes and constrain consumption, “the data suggests that pockets of the economy, particularly the leisure sector, enjoyed some renewed momentum in April”.
Spending on utility bills was up 34 per cent year on year, reflecting the surge in energy prices. As a result, many households had to cut other purchases, such as groceries, where sales rose 5.5 per cent, well below the food inflation running at nearly 20 per cent.
However, spending on entertainment registered a “sizeable” 12 per cent annual growth in April, according to Barclays, which it attributed to low levels in the same month last year when Covid-19 was still hampering demand.
Britons also booked more holidays with spending on airline tickets rising 32.1 per cent compared with the same month last year, an acceleration from the 28.5 per cent growth registered in March.
Source: Economy - ft.com
