Cost of living crunch hits UK consumers hard


British shoppers reduce sharply on spending final month in nearly all areas other than holidays because the rising price of dwelling hit budgets exhausting, in line with trade information.

Households adopted a extra frugal strategy in Might with inflation operating at its fastest annual pace in 40 years, stoked by a 54 per cent bounce in the price of common fuel and electrical energy payments a month earlier.

Retail gross sales fell at an annual charge of 1.1 per cent in Might, a sharper contraction than the 0.3 per cent fall within the earlier month and the worst since January final 12 months, in line with figures compiled by advisory agency KPMG and the British Retail Consortium commerce affiliation.

BRC chief government Helen Dickinson stated gross sales continued to see declines “as the price of dwelling crunch squeezed client demand”. She famous that higher-value gadgets, akin to furnishings and electronics, had taken the most important hit as customers reconsidered main purchases throughout this tough time.

The BRC warned that gross sales figures weren’t adjusted for inflation, that means that the drop in gross sales “masked a a lot bigger drop in volumes as soon as inflation is accounted for”.

Separate client spending information tracked by Barclaycard, the funds firm, which displays nearly half of all UK credit score and debit card transactions, additionally confirmed households tightening their belts throughout the board final month.

Britons reined of their spending on consuming and ingesting out, with expenditure on eating places down 5.9 per cent from Might final 12 months. It additionally fell month on month on April, Barclaycard stated, with out specifying the size of the decline. There was an identical fall in spending in bars, pubs and golf equipment alongside a 5.7 per cent drop in digital subscriptions, akin to Netflix, from a 12 months earlier.

The Barclaycard information, which equally should not adjusted for inflation, supported the BRC’s findings that folks have been reducing again on bigger-ticket gadgets, with spending in furnishings shops down 3 per cent month on month.

In distinction, the journey sector confirmed robust year-on-year progress, pushed by shoppers benefiting from the easing of Covid-19 restrictions. Spending rose nearly 180 per cent in contrast with the identical time final 12 months and was additionally up on April.

Journey brokers loved a sizeable uplift of 24.2 per cent on the earlier month, whereas spending on direct bookings with airways rose 6.6 per cent, as extra holidaymakers booked journeys overseas. Spending at UK resorts, resorts and different lodging rose by 1 per cent month on month.

Surging power payments drove up spending on utilities per buyer by 34.5 per cent in Might in contrast with the identical interval in 2021.

“The price of dwelling squeeze is clearly influencing discretionary spending habits, with figures exhibiting a decline in subscriptions, and a drop in spending at eating places, bars, pubs and golf equipment,” stated José Carvalho, head of client merchandise at Barclaycard.

Separate information from the BRC additionally urged that the platinum jubilee financial institution vacation weekend may present a lift to spending in early June, with UK footfall for the entire of final week up by 17 per cent in contrast with the common for Might.

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