Retail sales slow as cost of living bites

Retail sales growth slowed in October, industry research showed on Tuesday, as the mounting cost-of-living crisis curbed spending.

According to the latest BRC-KPMG Retail Sales Monitor, total sales rose by 1.6% in October, compared to a rise of 2.2% in September. The figure was below both the three-month average of 1.7% and 12-month average of 2.7%.

On a like-for-like basis, sales rose 1.2% year-on-year, compared to a 1.8% rise in September. That was largely in line with the three-month average of growth of 1.2%, and ahead of the 12-month average of 1.0%.

Helen Dickinson, chief executive of the British Retail Consortium, said: "As the cost of living for consumers continued to rise, retail sales slowed in October. With November’s Black Friday sales just around the corner, people look to be delaying spending, particularly on bigger purchases.

"Clothing and footwear, which saw stronger sales this year, declined as the mild weather meant customers held back on buying winter outfits."

The last three months of the year is crucial for many retailers, as shoppers splash out on festive treats.

But Dickinson warned: "Christmas will come later than last year for many, and may be more gloom than glitter as families focus on making ends meet, particularly as mortgage payments rise."

Paul Martin, UK head of retail at KPMG, said: "Despite the price of goods being higher than 2021, retail sales during October grew by just over 1% in value year-on-year. This increase is being driven by inflationary pressures and does not tell the true picture of sales volumes dropping as consumers purchase fewer products per shop.

"Sales across every category, both online and in store, fell year-on-year as consumers adjust to shrinking household incomes.

"Retailers will be hedging their bets on a successful World Cup and Black Friday to boost sales during the crucial golden quarter. Given the economic headwinds, it is unlikely that the usual festive boost will be enough to counteract the ongoing issues that retailers face with rising costs, squeezed margins and falling demand."

Over the three months to October, food sales increased by 5.1% on a total basis or by 4.7% on a like-for-like basis. Non-food sales fell by 1.2% and 1.8% on a total and like-for-like basis respectively over the same three-month period.

Online non-food sales fell 6.3% in October, compared to an 8% decline in October 2021.