Why UK retail sales growth is slowing

The British Retail Consortium said sales at its member stores rose 1.1% year-on-year, down from a strong 2.6% rise in January.

UK consumer spending lost momentum last month after a strong start to the year, despite rising household confidence in personal finances and the broader economy , according to a survey of retailers and consumers published on March 11.

The British Retail Consortium (BRC) said sales at its member stores, which are mainly large retail chains, rose 1.1% year-on-year in February, down from a strong 2.6% rise in January, helped by post-Christmas discounts.

UK consumer spending lost momentum last month. Illustration photo

BRC chief executive Helen Dickinson said the slowdown reflected weak consumer demand for spring fashion items as the February weather remained cold and there were repeated complaints about employers' social security taxes and the UK's packaging tax, which come into effect next month.

Helen Dickinson said that the UK industry had done everything it could to reduce costs, but now it would have no choice but to raise prices, reduce investment in jobs and stores, or both. She also said that the government ’s upcoming plans to make it harder to fire new staff could make traditional retailers reluctant to recruit new staff. Instead, the government should focus on tackling the wrongdoing of unscrupulous employers.

Consumer spending, which includes a broader range of goods and services than retail sales, rose 1.0% in February, down from a 1.9% increase in January, data from Barclays Global Bank showed.

However, Barclays' survey index of household confidence in their finances has hit its highest level since records began in 2015, at 75%, although this partly reflects their efforts to save.

UK consumer confidence in the economy as a whole has also increased, but remains very low at 25%. Barclays' spending data is based on debit and credit card spending between January 25 and February 21, while the consumer sentiment data is based on a survey of 2,000 people conducted between February 21 and 26. The British Retail Consortium's data covers sales between February 2 and March 1.

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