The UK’s soaring cost of living and last month’s record increase in household energy bills have slammed the brakes on consumer spending, retail sector figures show.
However, according to separate data, April was the strongest month for international travel spending since before the pandemic, as Britons took advantage of the easing of Covid restrictions to book foreign holidays.
Figures from the British Retail Consortium (BRC) show total retail sales across the UK fell by 0.3% in April as consumers tightened their belts. Spending on big-ticket items including electrical goods, furniture and homewares was particularly hard hit.
Reflecting the overall slump in spending, the drop in total sales over the four weeks to 30 April compared with a three-month average growth rate of 3.2% and a 12-month rate of 6.4%.
But separate data from Barclaycard showed improvements in spending on travel and international holiday bookings. The credit provider, which processes nearly half of all card transactions, said consumer spending grew 18.1% in April as airlines and travel agents had the best month since the onset of the pandemic two years ago.
Spending on hotels, resorts and accommodation rose 16.6% compared with the same month in 2019, the category’s highest growth since September last year, reflecting the scramble for weekend breaks at Easter and a rush for summer holiday bookings.
But Barclaycard said spending on essentials grew by marginally less than in March owing to a slight reduction in petrol usage, in a sign that Britons are seeking to save money on fuel and groceries.
Highlighting the hit from higher energy bills in April, average spending on utilities per customer grew 28.8%, while Barclaycard said as many as nine in 10 people were concerned about the impact of rising household bills on their finances.
According to the BRC, food sales fell 1.3% over the three months to April, compared with a 12-month average growth rate of 0.7%. While sales of clothes and footwear continued to rise, consumers curbed non-essential spending, with technology and items for the home bearing the brunt of spending cuts.
The BRC said April sunshine helped to boost sales of fashion and garden goods, including outfits for special occasions such as weddings.
The Bank of England has warned of mounting danger of a recession, with inflation on course to peak above 10% later this year, andHelen Dickinson, the chief executive of the BRC, said households were facing a difficult year ahead.
“The rising cost of living has crushed consumer confidence and put the brakes on consumer spending,” she said. “Further headwinds are incoming, such as rising global food prices, which rose 13% between March and April. Retailers will continue to do all they can to mitigate the effects of these costs rises, but unfortunately they cannot absorb them all.”