Retail spending growth slowed in September as households reined in discretionary purchases ahead of the Autumn Budget and amid mounting concern over rising bills.
According to the latest figures from the British Retail Consortium (BRC) and KPMG, total UK retail sales rose by 2.3% year-on-year over the five weeks to 4 October – only slightly above the 12-month average of 2.1%. The modest increase suggests consumer confidence remains fragile as households await potential tax and spending measures in the Chancellor’s forthcoming statement.
Food sales were the main driver of growth, rising 4.3% compared with the same month last year, but analysts said this was largely the result of persistent food price inflation rather than a meaningful increase in volumes.
Non-food sales rose just 0.7% on the year, falling below the 12-month trend, while online sales growth slipped to 1%, well down on the 3.4% recorded in September 2024.
BUYER BEWARE
Helen Dickinson, chief executive of the British Retail Consortium, said shoppers are showing greater caution as household budgets remained under pressure.
She added: “With the Budget looming large, and households facing higher bills, retail spending rose more slowly than in recent months.
“Milder weather meant shoppers delayed refreshing Autumn and Winter wardrobes and growth in food sales was largely inflationary rather than volume growth. Meanwhile, electrical sales were buzzing thanks to the release of the new iPhone and Apple Watch.”
And Dickinson warned that uncertainty over business rates and inflation could cloud the crucial Christmas trading period.
She said: “Rising inflation and a potentially taxing Budget is weighing on the minds of many households planning their Christmas spending.
“Retailers also face difficult decisions about investment and hiring over the Golden Quarter. By exempting large anchor stores from any new surtax when the Budget is announced, the Chancellor can help reduce the inflationary pressures hammering businesses and households alike.”
UNDER PRESSURE
Linda Ellett, UK Head of Consumer, Retail & Leisure at KPMG, said the figures show that “spending continues to be very targeted as consumers remain cautious.”
She added: “As we enter the ‘golden’ quarter, retailers are planning ranges and promotions to lift sales, while watching closely for any detail on business rates reform and measures to boost consumer confidence.”
In the grocery sector, Sarah Bradbury, Chief Executive of IGD, added that confidence remains subdued despite “tentative positive signs” among younger, affluent Londoners. “Grocery value growth remains strong, driven by food price inflation,” she said. “But volumes are sluggish as household budgets stay under pressure.”
