British customers in the reduction of sharply on spending final month in nearly all areas other than holidays because the rising value of residing hit budgets exhausting, in keeping with trade knowledge.
Households adopted a extra frugal strategy in May with inflation working at its quickest annual tempo in 40 years, stoked by a 54 per cent leap in the price of common gasoline and electrical energy payments a month earlier.
Retail gross sales fell at an annual charge of 1.1 per cent in May, a sharper contraction than the 0.3 per cent fall within the earlier month and the worst since January final 12 months, in keeping with figures compiled by advisory agency KPMG and the British Retail Consortium commerce affiliation.
BRC chief govt Helen Dickinson stated gross sales continued to see declines “as the cost of living crunch squeezed consumer demand”. She famous that higher-value gadgets, reminiscent of furnishings and electronics, had taken the largest hit as consumers reconsidered main purchases throughout this troublesome time.
The BRC warned that gross sales figures weren’t adjusted for inflation, that means that the drop in gross sales “masked a much larger drop in volumes once inflation is accounted for”.
Separate client spending knowledge 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 May final 12 months. It additionally fell month on month on April, Barclaycard stated, with out specifying the dimensions of the decline. There was the same fall in spending in bars, pubs and golf equipment alongside a 5.7 per cent drop in digital subscriptions, reminiscent of Netflix, from a 12 months earlier.
The Barclaycard knowledge, which equally are usually not adjusted for inflation, supported the BRC’s findings that individuals had 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 customers 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.
Travel 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 accommodations, resorts and different lodging rose by 1 per cent month on month.
Surging vitality payments drove up spending on utilities per buyer by 34.5 per cent in May in contrast with the identical interval in 2021.
“The cost of living squeeze is clearly influencing discretionary spending habits, with figures showing a decline in subscriptions, and a drop in spending at restaurants, bars, pubs and clubs,” stated José Carvalho, head of client merchandise at Barclaycard.
Separate knowledge from the BRC additionally recommended that the platinum jubilee financial institution vacation weekend might 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 typical for May.