The monthly health check from the British Retail Consortium (BRC) reported a third consecutive fall in activity as the cost of living crisis continued to bite. With the annual rate of inflation hitting 9.1% in May, the BRC said even a boost in demand from the Queen’s platinum jubilee celebrations failed to prevent June retail sales from being 1% lower than last year. The lobby group said retailers were struggling to avoid passing on higher costs to their customers and urged the government to provide help through lower business rates. A separate survey by Barclaycard showed a similar picture to the BRC, with spending on household goods falling by more than 5% year-on-year, providing evidence that consumers are cutting back on discretionary spending. The payments firm said 91% of people are worried about the negative impact rising household bills will have on their personal finances – up from 88% in May. With growth slowing, interest rates rising and the Bank of England predicting inflation to peak above 11%, Barclaycard said consumers are also feeling less optimistic about their ability to live within their means and their ability to they spend on non-essential items. Helen Dickinson, chief executive of the BRC, said: “Sales volumes are falling at a pace not seen since the depths of the pandemic, as inflation continues to bite and households cut back on spending. Discretionary markets were hit hard, especially white goods and homewares, while consumers also traded in cheaper brands in food and non-food. “While the Jubilee weekend gave a temporary boost to food sales and fashion sales benefited from the summer holiday and wedding season, this was not enough to counter a significant slowdown in consumer spending.” The BRC’s sales tracker showed food spending was higher in June than last year, while non-food spending fell. In the quarter to June, non-food retail sales were 3.3% lower than in the same period in 2021. Barclaycard – which tracks spending on dining out, entertainment and holidays in addition to retail sales – said spending on cards was 6.6% higher in June than last year. There was higher spending at cinemas and bars and on overseas travel last month. The latest report found that motorists’ spending rose by almost a quarter year-on-year after a steady rise in fuel costs pushed the average price of unleaded petrol above £1.90 a litre. José Carvalho, head of consumer products at Barclaycard, said: “The continued rise in fuel, food and energy prices means consumers need to budget and look for value where they can for essential and non-essential purchases. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk “While this cautionary approach affects supermarket and individual basket spending, there are positives to be found, with Britons increasing discretionary spending on entertainment, travel and takeaways as we head into summer.” Dickinson said: “Retailers are caught between significantly rising costs in their supply chains and protecting their customers from price increases. The government needs to get creative and find ways to help relieve this cost pressure – the upcoming consultation on transitional relief is a golden opportunity to ensure retailers don’t overpay their business rate bills. “Government action on transitional relief would make a significant difference to retailers’ costs and reduce price pressure for customers.”
