Sales growth slows as retailers prepare for ‘tough time ahead’

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Sales for the month of August slowed as consumers reined in spending and inflation pushed up costs to historic highs.

On a total basis, sales increased by 1% in the four weeks between July 31 and August 27, compared with a 3% increase in the same period in 2021, according to the BRC-KPMG Retail Sales Monitor.

That 1% figure was above the 0.7% three-month increase average and below the 2.5% growth across a 12-month period.

UK retail sales increased 0.5% on a like-for-like basis from August 2021 when they increased 1.5% – this was above the three-month average growth of 0.1% and below the 12-month average growth of 0.7%.

Over the three months to August, food sales increased 3.8% on a total basis and 3.3% on a like-for-like basis, while non-food increased 2% on a total basis and 2.6% on a like-for-like basis.

Online non-food sales fell 6.1% against a decline of 4.7% in the same period for August 2021. This is above the three-month average decline of 6.6% and the 12-month decline of 14.2%.

The non-food online penetration rate decreased to 38.5% in August from 40.2% at the same point last year.

British Retail Consortium chief executive Helen Dickinson said: “Retail sales growth slowed in August compared with the previous month as consumers reined in spending amid the spiralling cost of living. While inflation in retail prices is lower than general inflation at over 10%, this still represents a significant drop in sales volumes.

“For the first time in recent months, clothing sales were sluggish as summer events ended and parents held back on back-to-school spending. White goods and homeware remained hardest hit, but products such as air fryers and knitwear did get a boost as thrifty consumers prepare for soaring energy bills.”

“With some predictions of inflation reaching 20% in the new year, households and retailers are preparing for a particularly tough time ahead. As retailers face their own rising costs from all directions, they continue to do all they can to protect customers from price rises.

“The new prime minister could help relieve some of the cost burdens and ease the upward pressure on prices by freezing the business rates multiplier for all retail businesses next year.

“Without this, inflation could whack an additional £800m on to retailers’ rates bills, which will inevitably lead to even higher prices for households at a time when people’s income is under unprecedented pressure.”