Monday 4 March 2019 11:58 pm

Consumer spending growth slows and retail sales fall on Brexit fears


Reporter at City A.M. covering banking, markets and insurance

Reporter at City A.M. covering banking, markets and insurance

Follow Callum
Consumer spending growth and retail sales fell last month as households cut back on non-essential items amid fears over Brexit and the UK’s economic prospects.

Clothing, department store and hotel spending all contracted in February, according to the latest monthly spend data from Barclaycard.

Read more: Retail investors are sitting tight amid Brexit uncertainty

Spending in pubs and restaurants, traditionally robust categories, also grew at a weaker rate.

Consumer spending dropped to 1.2 per cent year-on-year in February, slowing down from 3.8 per cent in the previous 12 months.

New figures from the British Retail Consortium (BRC) and KPMG, released this morning, dealt the retail industry a further blow.

Retail sales in the UK dipped by 0.1 per cent on a like-for-like basis in February, sliding from a 0.6 per cent rise in the same period in the previous year.

Despite a modest recovery in sales during January, when many buyers flocked to the shops for new Year discounts, retailers suffered a slowdown in sales last month as industry experts warned that uncertainty ahead of Brexit seemed to dent shoppers’ spending habits.

“Uncertainty over brexit appears to be driving a shift in behaviour, with many Brits worrying about price rises and cutting back on non-essential spend, and some even stockpiling everyday items,” Barclaycard director Esme Harwood said.

“Discretionary expenditure has seen a considerable decline – spending at retailers continues to decrease, and even hotels, pubs and restaurants are feeling the impact of cutbacks,” she added.


However, consumers increased their spending on essential items by 2.3 per cent led by growth in supermarket sales, Barclaycard said, while the BRC also reported a rise in food sales.

Meanwhile, clothing spending plummeted 5.2 per cent compared with the previous year and after consecutive months of growth, hotel spending fell 3.8 per cent.

Read more: UK private investors say Brexit will provide opportunity, survey finds

“Across all categories there was sluggish growth, and the milder weather appears to have shifted the focus away from indoors with furniture sales declining – and not even Valentine’s Day could boost sales in the stationery category,” said KPMG’s UK head of retail Paul Martin.

“Non-food continues to be under more pressure than grocery, with shoppers focusing on the essentials,” he added.

 

Share


Tags: