UK retailers are on course for a budget Christmas after shoppers cut back on the purchase of non-essential items in November to cope with rising food prices.
Black Friday sales were unable to lift the gloom that has descended on the retail sector as many consumers struggled to cope with high borrowing costs coupled with high food and energy bills.
Sales of homeware and other non-food items fell by 1.6% in November despite a lift from bumper sales of cosmetics and beauty products, the British Retail Consortium (BRC) said.
An increase of 7.6% in food sales pushed the overall annual rise in total sales up 2.7% but this was a sharp decline from the 4.1% average annual increase in sales recorded over the last 12 months.
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Once inflation is taken into account, the BRC said the value and volume of sales was down on last year.
According to the latest figures from the Office for National Statistics, the consumer prices index measure of inflation was 4.6% in October.
Helen Dickinson, the chief executive of the BRC, said: “Black Friday began earlier this year as many retailers tried to give sales a much-needed boost in November. While this had the desired effect initially, the momentum failed to hold throughout the month, as many households held back on Christmas spending.”
She said retailers were banking on a “last-minute flurry of festive frivolity” to maintain revenues ahead of what she said would be a difficult 2024.
“Retailers will have to shoulder many new cost pressures [next year], including a rise to business rates, as well as costs from other new regulations. These combined with the biggest rise on record to the national living wage will mean retailers will have less capital to invest in lowering prices for their customers,” she added.
Paul Martin, the UK head of retail at the accountancy firm KPMG, which compiles the BRC figures, said: “With less than a month to go and sales growth limping along, the cost of living crisis has taken its toll on Christmas spending for many households, and the continued economic conditions are testing consumer resilience.”
He predicted steep price cuts before and after the festive period, with retailers competing for a shrinking pool of disposable incomes.
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Separate figures from Barclaycard also showed a decline in the inflation-adjusted value of retail sales.
Spending grew 2.9% year on year in November, the credit card company said.
It reported a lift from spending on clothing and department stores – up 2.8% and 5% respectively – as shoppers refreshed their winter wardrobes.
However, heavy rain and a drop in temperatures hit the restaurant sector. More than a third (36%) of consumers reported that the cold weather and dark evenings have had an impact on their spending patterns, resulting in a boost for takeaways, which increased by 6.1%.
