UK retail sales growth slows amid higher costs for consumers

Retail sales growth slowed in September as consumers limited their spending in the face of higher housing, rental and fuel costs.

Total UK retail sales limped to a 2.7% increase in September despite the fall in inflation, in line with the three-month average but well below the 12-month average of 4.2%, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.

Consumer caution saw sales of big ticket items such as furniture and electricals performing poorly, while the warm temperatures stretching late into the month meant sales of autumnal clothing, knitwear and coats have yet to materialise.

However inflation is still significantly higher than recent historical standards and sales volumes remain down year-on-year.

Online sales growth continued to fall, with just health, beauty and jewellery recording positive figures.

September signals the 26th month of continuous online sales decline, with retailers hoping for a strong Black Friday to reverse their fortunes.

Helen Dickinson, CEO of the BRC, said: "With sales volumes down, growth has been artificially boosted by high inflation over the last two years. As inflation eases, so too will longer-term sales growth prospects.

"The coming months are crucial for retailers as they enter the ‘Golden Quarter’ and they’re investing heavily to support customers and bring prices down."

Paul Martin, UK Head of Retail at KPMG, said: "With the warmer weather delaying household heating being switched on, positive news around falling inflation and a hold on rising interest rates, consumers will hopefully be feeling a bit more confident as thoughts turn to Christmas shopping.

"After years of battling challenges, the resilience of the retail sector has been dented and we are starting to see the gap between the strongest and the weakest on the high street widen.

"The fight for Christmas shoppers will be fierce this year, with promotions likely to be earlier and abundant in a bid to loosen tight household purse strings."