LONDON (Reuters) – Britain’s customers spent extra on meals within the three months to February and as soon as once more in the reduction of on non-essential purchases because the rise in inflation after the Brexit vote of 2016 squeezed their spending energy, a survey confirmed on Tuesday.
The amount of cash spent with retailers in February rose by 1.6 p.c in contrast with a yr earlier, barely above the tempo of development seen within the earlier three months, the British Retail Consortium (BRC) mentioned.
“The fact is that consumers want to spend, they just don’t have the resources to do so,” BRC Chief Executive Helen Dickinson mentioned.
Non-food gross sales within the three months to February had been zero.5 decrease than a yr earlier, whereas meals gross sales grew four.zero p.c.
“With the upward pressure on prices from the fall in the pound now starting to subside we expect to see some loosening of the squeeze on spending on non-essentials, but it’s likely to come slowly,” Dickinson mentioned.
On a like-for-like foundation, which doesn’t embody spending at newly opened shops and strips out the impact of closures, spending in February was zero.6 p.c larger than a yr earlier.
Payments agency Barclaycard (BARC.L) instructed the same story to the BRC on Tuesday, saying its card customers elevated their spending by greater than the speed of inflation for a 3rd month in a row, however many needed to tweak their budgets to go away money for “nice-to-haves”.
Overall client spending rose by an annual three.eight p.c, barely down from January’s improve of three.9 p.c and pushed by spending on actions akin to going to the cinema or the theatre which bounced again after falling for 5 months.
Barclaycard Managing Director Paul Lockstone mentioned Britain’s negotiations to go away the EU had been more likely to maintain weighing on client confidence.
“Consumers are cautious about the potential ramifications of whatever settlement the UK achieves and half of us fear that the outcome will leave us worse off than we are now,” he mentioned.
Households in Britain have been hit by an increase in inflation to above three p.c in late 2017 whereas wages have grown extra weakly. However, the Bank of England and plenty of personal economists anticipate wages to choose up and overtake inflation later this yr.
Jobs listings web site Adzuna mentioned the common wage for jobs marketed in January hit 33,369 kilos ($46,079), the very best in practically two years, and had been up in each space within the United Kingdom for first time since Adzuna started regional monitoring in mid-2015.
“Without wishing to tempt fate, it does look like the worst of the pay squeeze seems to have passed,” Adzuna co-founder Doug Monro mentioned.
($1 = zero.7242 kilos)
Reporting by Elizabeth Burden; Writing by William Schomberg