British consumers sharply reined in their spending during October, creating the slowest retail sales growth since May as anticipation for Black Friday discounts and anxiety over the forthcoming budget combined to dampen high street activity.
Key Figures Reveal a Spending Slowdown
According to the latest data from the British Retail Consortium (BRC) and advisory firm KPMG, retail sales increased by just 1.6% in October. This marks a significant step down from the 2.3% growth recorded in September.
The slowdown was particularly pronounced in food sales, where growth decelerated by 0.8 percentage points to 3.5%. The BRC noted that this growth was mostly driven by higher prices rather than higher volumes, indicating that shoppers are buying less despite spending more.
Non-food sales were virtually stagnant, registering a minuscule 0.1% year-on-year increase. Sales of footwear, stationery, and home appliances fell, with retailers blaming milder autumn weather and consumers deliberately holding out for the promotional bonanza of Black Friday on 28 November.
Plummeting Consumer Confidence
Separate figures from Barclays bank painted a parallel picture of growing consumer caution. The bank reported that spending on its credit and debit cards fell by 0.8% in October, following a 0.7% drop in September.
More strikingly, Barclays found that for the first time since August 2022, all seven of the consumer and economic confidence measures it tracks had declined. Confidence in household finances saw the most dramatic fall, dropping from 74% to 63%.
The report also revealed that:
- A third of consumers are postponing major purchases until after the budget announcement.
- Confidence in job security fell to its lowest point this year at 44%.
- The proportion of people confident in spending on non-essential items hit a 2023 low of 51%.
Retailers Voice Their Concerns
The timing of the government's budget announcement, scheduled just days before Black Friday, has caused significant concern within the retail industry. Helen Dickinson, Chief Executive of the BRC, stated, “Retailers are counting on Black Friday to deliver a vital boost, but looming budget decisions risk undermining fragile consumer confidence.”
This sentiment is echoed by major retailers, including Sainsbury's boss Simon Roberts, who have expressed worry that potential tax rises announced by Chancellor Rachel Reeves could stifle the crucial pre-Christmas spending period.
Sarah Bradbury, CEO of the grocery trade body IGD, added that shoppers are increasingly prioritising saving money over quality. “With the job market stalling and the gap between pay growth and price rises narrowing, overall shoppers aren’t feeling much benefit,” she said, predicting continued caution in the run-up to Christmas.
