Britain’s online stores drove an unexpected jump in retail sales last month, offering promotions to draw in consumers hit by the cost-of-living crisis.
(Bloomberg) — Britain’s online stores drove an unexpected jump in retail sales last month, offering promotions to draw in consumers hit by the cost-of-living crisis.
But the figures came alongside a drop in consumer sentiment to a record low, underscoring increasing concerns about a recession and soaring inflation that are tightening a squeeze on household finances.
The volume of goods sold in stores and on the Internet rose 0.3%, confounding predictions from economists for a small decline, the Office for National Statistics said Friday. That was driven by a 4.8% surge from web-based retailers, which offset a decline in sales of clothing, household goods and second-hand items including antiques.
“The summer sunshine brought a slight uplift in sales,” said Helen Dickinson, chief executive officer of the British Retail Consortium. “Summer clothing, air conditioning appliances and outdoor foods all benefitted from record temperatures, but most retailers will still be seeing falling volumes in the face of rising inflation.”
The figures also showed the value of retail sales rising sharply while volumes stagnate. That indicates higher prices mean that consumers are paying more to the same amount of goods.
Friday’s report caps a week of gloomy data on the economy, adding to the risk of a recession. Consumer confidence fell to the lowest since records began in 1974, the market researcher GfK said earlier Friday.
“The strain on the personal finances of many in the UK is alarming,” said Joe Staton, client strategy director at GfK. “Just making ends meet has become a nightmare. The crisis of confidence will only worsen with the darkening days of autumn and the colder months of winter.”
Real wages adjusted for inflation fell 3% in the second quarter, the sharpest pace on record. Consumer price growth broke into double digits last month for the first time since 1982.
More concerning is the outlook for the labor market. New job vacancies fell for the first time since August 2020. That’s a sign that demand for workers may be cooling, which would remove the strongest pillar of the economy since the pandemic.
The Bank of England is focused on bringing inflation back to its 2% target and has signaled that further interest-rate increases are likely — even if those curb growth. Investors anticipate a half-point increase in the benchmark lending rate to 2.25% and rates above 3.5% by the middle of next year.
Read more:
- UK Heat Wave Boosts Sales in Shops and Spending on ‘Staycations’
- UK Real Wages are Falling at Their Fastest Pace on Record: Chart
- UK Inflation Hits Double Digits for the First Time in 40 Years
- Poorest UK Households Hit Hardest by Surge in Inflation
- UK Retailers Report Prices Rising at Sharpest Pace Since 2005
- UK Businesses Say Economic Growth Slowed to a Crawl in July
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